Input Stories

Mining companies will soon be allowed to claim the NAM-supported 45X tax credit for critical minerals production. The credit was created by the 2022 Inflation Reduction Act (E&E News).   

What’s going on: The Treasury Department announced Thursday that its “final rules for the Advanced Manufacturing Production Credit, also known as 45X, now [include] a 10% tax cut for mineral production, following a steady drumbeat of calls to tweak and expand the credit to boost domestic mining.”  

• The final guidance—which comes less than a year after the issuance of the proposed rules—also gives the credit to manufacturers of solar and wind energy components and lithium-ion battery makers. 

What’s in it: Unlike the draft rules, the final guidance makes “material costs and extraction costs” eligible for the tax credit, a change Treasury made following a public comment period.   

• Companies must mine, process and/or refine the minerals in the U.S. to qualify, so businesses that mine but do not process minerals domestically cannot claim the credit.
• However, the credit can be claimed if the mining is done abroad—as long as the processing is done to a certain purity level in the U.S. 
• Further, companies will only receive the credit once they have made an “eligible component,” and the mining must take place in the U.S. 

Why they’re doing it: The aim is “to incentivize critical mineral production in the U.S. in the face of a yearslong Chinese stranglehold over global mineral supply,” top Biden administration officials told E&E News.

• China accounts for 60% of the world’s critical mineral production and 85% of processing capacity.  

Why it’s important: “[I]ncluding critical mineral extraction and materials costs in the credit calculation will help bolster supply chain resiliency throughout the manufacturing sector,” said NAM Managing Vice President of Policy Chris Netram.

• “This tax credit will help manufacturers build a strong and sustainable domestic advanced manufacturing supply chain—from mining to processing to final product assembly.”