Washington, DC — Responding to the release of finalized tax credit guidance for Section 45x of the Inflation Reduction Act of 2022, to incentivize the production of eligible components within the United States, SAFE experts issued the following statements:
Abigail Hunter, Executive Director of SAFE’s Center for Critical Minerals Strategy
“We applaud the administration’s final 45X rule, which acknowledges the mineral intensity and costs of building clean energy and advanced manufacturing supply chains in the United States. The final rule is a game-changer for companies refining, smelting, and processing materials at home—especially in today’s low-price market.
The midstream is the most concentrated node of the supply chain—and also where the United States can compete in the short term without resource constraints. Supporting domestic processing facilities creates reliable buyers for miners, or alternatively incentivizes them to co-locate future mining and processing operations domestically.
Once we’re no longer playing catch-up, this midstream demand pull can help us source more domestically and from trusted jurisdictions. However, we need further action, like permitting reform, to fully unlock domestic mineral projects.”
SAFE’s Center for Critical Minerals Strategy submitted detailed comments on the proposed rulemaking in February 2024 in support of the following principles:
- All material costs, direct and indirect, including the costs of mineral extraction, should be included in the calculation to determine the cost of producing applicable critical minerals, and therefore taken into account when calculating the value of the tax credit.
- The entire value of the tax credit should be available to the taxpayer who is responsible for the final stage in manufacturing the component or producing the applicable critical mineral as defined in the statute and should not be divided among suppliers across the supply chain.
- All costs of production should be included when calculating the cost of producing an applicable critical mineral regardless of where the costs were incurred, including those costs that were incurred outside of the United States.
- In calculating the cost of producing electrode active materials, the taxpayers should include all costs, direct and indirect, including the cost of acquiring applicable critical minerals, even if that allows certain production costs to be the basis of calculating the value of the tax credit.
Joe Quinn, Executive Director of SAFE’s Center for Strategic Industrial Materials (C-SIM):
“Most attempts at policy solutions for the aluminum industry have focused on price, such as trade negotiations, anti-dumping measures, and tariffs. But the real challenge for domestic producers is the cost. The 45X rule finally addresses that side of the equation.”
Over the last decade, aluminum has been disputed, tariffed, monitored, traced, capped, and greened. President Obama opted for multilateral and bilateral cooperation. President Trump invoked trade wars and enforcement to prompt negotiations. President Biden has been building incentives for a cleaner aluminum market with allies. All the while primary aluminum smelters in the U.S. continued to close.
The Initial Rule released in December included the cost of energy, which is about 40% of total costs of production, thus helping U.S. primary aluminum producers bolster U.S. operations and strengthen global competitiveness. That was a significant development, but more is needed.
In comments and verbal testimony submitted to the Department of the Treasury in February 2024, C-SIM applauded the initial rule for correcting the definition of the aluminum production process and including energy costs. C-SIM called for expanding the definition of eligible aluminum products to more accurately reflect the market for commodity-grade primary aluminum and the eligible raw material production costs to include alumina and anodes.
“The expanded definition of the 45X credit can provide the support needed for primary aluminum producers to stabilize production and strengthen the U.S. supply of this critical material.”
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SAFE’s Center for Critical Minerals Strategy (Minerals Center) aims to secure all aspects of the critical minerals supply chain to help ensure the national and economic security of the United States and our allies as we transition to a minerals-based economy. The Minerals Center is the sole NGO partner for private sector engagement to the U.S. State Department’s Mineral Security Partnership. The Center is also home to the Sub-Committee on Opportunities and Risks in the Critical Mineral Sector (SCOR) project with five leading mining investment firms.
SAFE’s Center for Strategic Industrial Materials (C-SIM) is dedicated to advancing resilient and secure supply chains for the industrial materials critical to America’s national and economic security. The Center collaborates with producers, buyers, government, and NGOs to achieve tangible policy outcomes that enhance domestic industry supply chain reliability in a global market.
SAFE is an action-oriented, nonpartisan organization committed to transportation, energy, and supply chain policies that advance the economic and national security of the United States, its partners, and allies. Since 2004, SAFE has worked with its Energy Security Leadership Council—a peerless coalition of current and former Fortune 500 CEOs and retired 4-star admirals and generals—to support secure, resilient, and sustainable energy solutions. Learn more at SecureEnergy.org.
