Sunset of US 45X tax credit makes some critical mineral projects unviable: miners

Critical mineral producers are struggling with project economics after President Donald Trump's budget reconciliation bill eliminated long-term certainty for the Section 45X advanced manufacturing tax credit, industry executives said at a Dec. 11 conference in Washington, DC.

The sweeping legislation signed into law on July 4 phases out the credit starting in 2031 and eliminates it in 2034, removing what had been a permanent incentive under the Biden-era Inflation Reduction Act.

The change is forcing companies to reassess project viability and make difficult operational decisions as they compete with lower-cost foreign suppliers, particularly from China and Russia. The 45X credit provides up to 10% of production costs for US-based producers of critical minerals including cobalt, graphite, palladium and platinum — materials essential for renewable energy infrastructure, advanced electronics and defense systems.

Removing the 45X tax credit "was a huge hit to us," said Heather McDowell, senior vice president and general counsel for legal and external affairs, Americas, at Sibanye Stillwater Ltd. "Having that tax credit indefinitely is really what we expected."

The company, whose Montana operations include the only US-based palladium, platinum and rhodium mine, has cut approximately 40% of its workforce in recent months, McDowell said.

Operational impacts

Matthew Lengerich, president and executive general manager at Jervois Mining USA Ltd., said his company expanded its Finland project into the US specifically because of the 45X tax credit and other incentives. Jervois operates the only US-based cobalt mine in Idaho, though it has faced operational challenges due to price volatility.

"The project doesn't work without that tax credit," Lengerich said, highlighting the fundamental role the incentive played in making US critical mineral projects economically viable.

The discussion reflects broader challenges facing the US critical minerals sector as it attempts to reduce dependence on foreign suppliers while competing against state-subsidized operations. Price support mechanisms are a topic of increasing debate among business leaders and policymakers, with some arguing that Western projects cannot survive without effective government backing.

Earlier this year, the Department of Defense entered into a 10-year agreement with rare-earth producer MP Materials Corp. that guaranteed an offtake agreement at prices well above current market levels.