A structural mismatch between domestic mineral supply and demand has created an obstacle to continued growth in U.S. manufacturing.
This week’s Manufacturing Day aims to ensure the ongoing prosperity of the U.S. manufacturing industry. Already first in the world, recent reports project that manufacturing will grow 3.4% in 2014, with continued growth over the next two years. While numerous factors influence this manufacturing renaissance, fundamental among them are secure and reliable domestic supply chains.
One important component of a successful supply chain is availability and access to the raw materials necessary to build today’s products. Whether manufacturing high-tech devices, electric vehicles, medical equipment or advanced energy technologies, all share a common need for minerals and metals. The National Mining Association recently commissioned SNL Metals & Mining (SNL) to examine the extent to which mining contributes to the manufacturing industry. The study, U.S. Mines to Market, found that while U.S. manufacturing prospers, a gross structural mismatch between domestic mineral supply and demand creates an obstacle to continued growth in the manufacturing industry. According to the study, U.S. minerals mining is stifled by an inefficient permitting process, threatening domestic manufacturers’ supply chains.
Last week, Mark Fellows, the author of U.S. Mines to Market, spoke at hearings held in the U.S. House of Representatives and the Senate about the need to fix the inadequacies of this permitting process. Fellows, an expert on the global mining industry, stressed the importance of reducing risks from geopolitical conflict, trade disputes, natural disasters and other supply chains risks confronted by outsourcing these materials.
According to SNL, reshoring is being driven by manufacturers’ desire to reduce supply chain risks. And the “Made in America” stamp is now more valuable than ever because of the United States’ superiority in environmental standards, sustainable practices and human rights. However, the United States’ import reliance for the minerals we could be producing here—stymied by this inefficient permitting process—forces manufacturing companies to shoulder the additional burdens and costs associated with logistics, compliance transportation, travel and currency conversions, among others.
The United States, replete with resource wealth, has the potential to source raw materials that manufacturers need, such as copper, gold, platinum, molybdenum, zinc and iron ore. A Fraser Institute survey in 2013 found that many states—including Alaska, Nevada and Colorado—scored as encouraging places to invest because of their mineral potential. However, when asked about existing regulations, scores for these states plummeted, as respondents felt that regulatory uncertainty deterred investment potential. Without investment in domestic mining and continued production, manufacturers in the United States will become increasingly dependent on foreign countries to supply their operations.
U.S. mining companies aim for top quality. In fact, the United States has some of the most stringent environmental regulations in the world with regard to minerals mining—a fact the industry proudly touts. But countries like Canada and Australia have comparable environmental standards and are able to obtain permits and open mines in a fraction of the time it takes to get an approval in the United States.
If the United States is to maintain its position in the global economy, its industries must align. A stable and robust mineral supply is, and will continue to be, a fundamental pillar supporting our manufacturing industry. In light of Manufacturing Day and the need to bolster this central industry, lawmakers must make the mine permitting process more predictable and efficient so U.S. mining—the front-end of the supply chain—can assure that manufacturers will successfully produce American-made products, create high-wage jobs and improve Americans’ standard of living.
Hal Quinn is president and CEO of the National Mining Association, which represents the U.S. mining industry.