The rules focus mainly on critical mineral processing – pure mining companies will miss out.
The United States expands tax cuts under the Inflation Reduction Act to critical mineral production as well as the manufacturing of some clean energy components. On Thursday, the Department of the Treasury and the Internal Revenue Service published final rules regarding the Advanced Manufacturing Production Credit (PDF), a key element of the IRA. The new rules include a ten percent tax break for applicable products, namely battery, wind, and solar components, as well as refining critical minerals. Mining costs will only qualify for tax cuts if “certain conditions are met,” the Treasury said, adding on page 14 that “the action of extraction alone does not produce an eligible component.” This translates to companies solely focusing on mining without producing refined products or having them processed abroad will miss out on the tax cuts. In contrast, refiners, including those that purchase raw materials from abroad will gain access to them. Companies that mine and process in the U.S. will reap the full benefits of the final rules.
While this is still close to the proposed rules published last December, the tax cuts will benefit some miners and could help motivate other companies to build up domestic refining capacities. The nonprofit organization SAFE, dedicated to diversifying fuel sources and supply chains needed for energy, applauded the final rules, adding that it would be a “game-changer for companies refining, smelting, and processing materials at home.” The organization believes that the U.S. could compete in the midstream of the supply chain without resource constraints.
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