Some Friday night research. If you recall, I posted an article from the Wall Street Journal where Talga was apparently named in what was being called a draft of the CRMA as one of the projects that has struggled with permitting procedures taking too long. Here is what that article was talking about:
(It's a goldmine of information that covers much more than what I am sharing - financing projects etc.)
Driver 2.7: Lack of public acceptance for critical raw materials mining in Europe
The issues pertaining to permitting of critical raw materials projects are often intertwined with issues of lack of public acceptance. The Public Consultation showed that a lack of, or limited, public acceptance for new critical raw materials projects in EU was often driving away investments in the value chain (64 % of respondents agreeing or strongly agreeing). Licence to operate was reported as a main business risk, other abuses of fundamental labour rights, such as child labour are prevalent. This tarnishes the reputation of mining in Europe as well, where environmental impacts, worker rights and public participation are well-regulated (see discussion of the environmental legislation under Annex 8).
Improvement and better enforcement of environmental legislation, including post-concession management,should address concerns from society. Nevertheless, resistance to projects, particularly for extraction, still exists, driven partially by justified environmental concerns and partially by what has been termed “NIMBYism” – a situation where stakeholders agree on the need for such projects in general but are opposed to the siting due to local interests90. The European Federation of Geologists provided a list of the top 10 mining opportunities in the critical raw materials sectors that are stalled/on standstill due to permitting and/or social engagement issues. Such projects relate to the production of lithium, rare earths, nickel, graphite, copper.
9.1.18.2. Driver 2.2: Unpredictable and fragmented permitting procedures
Industrial activities along the raw materials value chains, including exploration, mining, processing, refining and recycling, make use of energy-intensive processes with potentially significant impacts on the environment and local communities. Therefore, various areas of legislation, including on land use planning and nature conservation, apply to their planning and operation. Compliance with these rules is ensured through the obligation to obtain several permits before starting operations.
EU legislation determining the process and substance of permitting procedures related to CRM projects includes the Strategic Environmental Assessment (SEA) Directive, the Environmental Impact Assessment (EIA), Birds, Habitats314, Water Framework, Industrial Emission Directives and the Seveso Directive (an overview of permitting-related EU legislation is included in Annex8). This legislation seeks to mitigate the risk of causing significant adverse environmental effects,such as generation of contaminants deposited on land, in the air and water, with the development of exploration, mining, refining and recycling activities. Member State legislation on the process and criteria for issuing permits reflects such EU rules and adds rules in areas of national competence.
The costs and time associated with permitting procedures and the likelihood of obtaining a permit are key considerations underlying investment decisions in the CRM sector. Currently, the unpredictability of the length of national permitting processes and of the criteria for the assessments and documentation required are often reported as barriers to investment in new CRM projects.315Consultations with stakeholders in the context of this initiative have further underlined the degree to which this unpredictability is perceived as a barrier to building an EU CRM value chain.
For raw materials extraction projects, the MINLEX study showed that times to obtain a permit(related to all relevant rules, not only environmental) can vary between procedures from 3 months to 3 years. More problematically, outliers can be found with timelines up to 9 years.
Current examples of CRM projects where permitting procedures are, for different reasons, lasting longer than was initially expected include:
the Sakatti project in Finland, aimed at producing platinum group metals (as well as nickel and copper), where the permitting process started in February of 2018 and where, as per December 2022, there was no decision yet (approx. 4 years later);
the Mina do Barroso project in Portugal, aimed at producing lithium, where the permitting process started in 2018 with a decision initially expected within 140 working days - in line with the guidelines of the responsible authorities - and where currently the decision is expected in April 2023 (approx. 4 years later);
the Talga project in Sweden, aimed at the production of natural graphite, where the EIA report was submitted in May 2020 and where, as per December 2022, there was no decision yet (approx. 2,5 years later).
One reason for unpredictable timelines is that the procedure for performing the necessary environmental assessments is not consistently implemented, within and across Member States,especially with regard to the timing. The average duration of the procedure provided for in the EIA Directive (for all projects in scope, including CRM projects), for example, was, according to the most recent data, approximately 11.6 months, but with figures ranging from 5 to 27 months.
Similarly, differences can be observed in the structure of the procedure, with various levels of authorities (local, regional, national) involved in this process. The “one-stop shop” concept allows applicants to interact with a single authority and facilitates efficient coordination among authorities, which is especially relevant when dealing with interdisciplinary projects. EU law also facilitates the development of a “one-stop shop” for permitting by allowing to streamline the environmental assessment procedures at planning level and project level. However, the MINLEX study assessed that, as of 2017, only some jurisdictions have a one-stop-shop regime inplace and that, without distinguishing per type of mineral, an average of 3.03 authorities were involved for exploration projects and an average of 4.02 authorities for extraction projects.
Environmental assessment procedures are organised differently across Member States also in terms of content. First, the number of different environmental assessments required differs between Member States. Although the EIA Directive explicitly provides that the environmental impact assessment of projects can be integrated with other required assessments (i.e. those under the Habitats, Birds, Water Framework and Industrial Emission Directives), offering significant potential for simplifying procedures where multiple assessments are required and several authorities are involved, this option is not consistently applied. Second, a lack of clarity aboutthe scope and level of detail of the information required in the environmental assessment report can lead to multiple exchanges and new requests between the developer and the competent authorities leading to delays. The EIA Directive provides that project developers may request a scoping opinion from the competent authority identifying the content and the extent of the assessment and specifying the information to be included in the EIA report, to provide clarity from the outset. However, only in a number of Member States such scoping applied consistently.
Such different time schedules and approaches applied by the authorities can generate significant uncertainty and delays for the developers, with associated additional costs. This is particularly challenging for projects along the critical raw materials chain, where large capital investments are needed to develop a plant and start production. At the same time investors need to be able to perform long-term planning of operational costs and revenues to create a profitable business model against the background of volatile commodity and energy markets. The unpredictability of permitting procedure therefore discourages private investment.
An additional point made many by stakeholders is that public authorities responsible for issuing permits sometimes lack sufficient expertise and resources, such that investing into skills and the budget of permitting authorities could speed up procedures.328 It should also be noted that, in addition to the permitting procedure as such, judicial appeals can also lead to delays. MINLEX’ court cases database indicated that a majority (53 %) of the appellants are companies, followed by NGOs (14 %).329 Appeals were reported to be a concern in the mining sector because, even though they ensure the right of access to justice, they often cause increased unpredictability for potential investors and other concerned stakeholders."
TLG Price at posting:
$1.52 Sentiment: Buy Disclosure: Held
(20min delay)