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President Trump’s proposed tax and spending package, the “One Big Beautiful Bill Act,” could significantly impair the U.S. critical minerals sector by eliminating the 45X production tax credit central to the Inflation Reduction Act (IRA). This strategic move could leave American producers at a disadvantage, particularly in light of China’s dominance in minerals like nickel, cobalt, lithium, and rare earths.
What’s at Stake
The 45X credit provided a crucial 10% reduction in corporate taxes for domestic critical minerals extraction and processing resources now considered essential for national security, clean energy, and advanced electronics. Losing this incentive threatens to shut down projects vital to the U.S. supply chain, especially as Chinese minerals are heavily subsidized and exported at scale.
Consequences for U.S. Projects
- Project closures already loom, with one domestic cobalt mine in bankruptcy due to falling global prices driven by Chinese production.
- Executives from U.S. firms, such as Kaleigh Long of Westwin Elements, warrant further losses unless the incentive is preserved.
- Removal of the IRA’s 45X credit also eliminates backing from the DOE’s Loan Programs Office, another critical funding source for the sector.
Industry and Bipartisan Concerns
- More than 30 industry leaders have petitioned the Senate to retain the credit, highlighting its importance to domestic project viability.
- Senate Democrats, led by Sen. Hickenlooper, called the repeal “job-killing” and cautioned against favoring the wealthy at the expense of industry.
Strategic Implications
As Chinese firms continue to saturate global mineral markets and export restrictions loom post-U.S. tariff actions, maintaining the 45X credit is crucial to restoring supply-chain resilience. Otherwise, the U.S. risks ceding ground in the emerging green and defense materials sector, precisely opposite the stated policy goals.
What Happens Next
The Senate’s decision on the bill with potential revisions will determine whether the credit survives. A repeal would leave Congress responsible for reconciling the House and Senate versions and resolving the country’s strategic direction on critical minerals.
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