Trump's tax-cut bill could hold back projects

Gulf Today

13 hours ago

US President Donald Trump's tax and spending bill would make it harder for American critical minerals companies to compete with China because it eliminates a tax credit for boosting domestic production of nickel, rare earths and other materials used in advanced electronics and weaponry, reported Reuters. With Trump and Republican lawmakers aiming to cut government support for green energy projects, the US House of Representatives passed a version of his "One Big Beautiful Bill Act" last month that eliminates the so-called 45X credit. The Senate is now debating the bill.
Former President Joe Biden's 2022 climate change law, the Inflation Reduction Act, created the 10% production credit — a reduction in corporate taxes for critical minerals extraction and processing. The tax break also covers solar, battery and wind projects. The version of the bill that passed the House treats government incentives for wind turbines the same as those for mining projects that many view as crucial for national security. Critical minerals companies now say their projects are collateral damage to the political feud over renewable energy. The tax credit is already law and part of the current federal budget. The nonpartisan Congressional Budget Office, which scores the cost of legislative proposals when asked by Congress, has not studied how much would be saved by removing the credit.
The Republican majority in Congress is seeking savings to fund other priorities such as tax cuts, defense and balancing the budget. This month, the hard-right House Freedom Caucus said it "will not accept" attempts to "water down, strip out, or walk back the hard-fought spending reductions and IRA Green New Scam rollbacks achieved in this legislation." Miners, though, say they need the credit to compete with China. Beijing has halted exports of some critical minerals, used its control of rare earths to strike a trade agreement with Washington, and flooded global markets with cheap supply of nickel, cobalt and lithium.
The traditionally conservative mining industry now finds itself in the unusual position of needing Washington's support to grow and, in some cases, survive. The owner of the only US cobalt mine went bankrupt this year after Chinese miners depressed global prices of that metal.
"If we do not have that tax credit, critical minerals producers in the U.S. are at risk of succumbing to closures," said KaLeigh Long, founder and CEO of Westwin Elements, which is building the country's only commercial nickel refinery.
Westwin might not be able to service its debt without the tax credit, Long said, noting the company's loans were modeled using the expectation it would be permanent. Last month, Long wrote a letter asking the Senate to keep the credit. It was co-signed by 30 industry executives.
Any changes the Senate makes to the bill must be reconciled with the House version before being sent to Trump, observed Reuters. Several House members have admitted they did not read the entire bill before voting for it, including Congresswoman Marjorie Taylor Green, a Georgia Republican, and Congressman Mike Flood, a Nebraska Republican.
The House version does include $2.5 billion to fund a critical minerals stockpile and $500 million for a Pentagon mining loan program, although large mines often cost far more, noticed Reuters.
House Democrats unanimously voted against the bill but their criticism has focused on tax cuts they say will widen the deficit while requiring cuts in health care, food assistance, education, scientific research and other programs. "There's so many issues right now under consideration in Congress and this one isn't breaking through, but it will certainly break through when we have a shortage of minerals in five years," said Jeff Green, a critical minerals industry consultant.