The letter asked the Internal Revenue Service (IRS) to extend the Section 45X Advanced Manufacturing Production Tax Credit – known as the 45X tax credit – to the cost of mining key minerals for the energy transition. Currently, the 45X tax credit applies only to the cost of processing critical minerals needed for EV and other clean energy technologies.
The 45X tax credit was enacted with bipartisan support as part of the Inflation Reduction Act (IRA) of 2022. It offers tax credits to battery manufacturers if they use raw materials sourced from within the US or from countries that are US free trade partners.
“Section 45X creates a new tax credit that provides $35 per kWh for each battery cell, $10 per kWh for each battery module, and covers 10% of the costs of production of the applicable critical materials, which will significantly drive down the costs of domestic clean energy manufacturing,” the letter said.
The letter stated that, if implemented thoughtfully, the 45X tax credit would ensure the success of current US industrial policy over the next decade by facilitating the deployment of domestically produced clean energy technologies, particularly electric vehicles (EVs).
But a decision to deny the 45X tax credit for raw material costs would curtail future domestic supply, worsening an increasing minerals bottleneck rather than alleviating it, the letter noted.
“Congress intended the 45X tax credit to work in tandem with the clean vehicle credit’s sourcing requirements to stimulate domestic production of critical minerals and reduce the United States’ reliance on imported minerals,” the letter said.
“To stimulate greater security of our domestic critical mineral supply chains and unlock the intended impact of the statute, the undersigned organizations urge the Department of the Treasury and the IRS to consider that direct and indirect material costs and costs related to the domestic extraction of raw materials are value-added activities and should be eligible to claim the 45X tax credit,” the letter continued.
The positive impacts of IRA-related tax credits have already been seen on automotive companies around the world.
General Motors has previously backed a plan by US President Joe Biden to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid or fuel cell EVs.
The US is aiming to reduce greenhouse gas emissions from new passenger vehicle sales by more than 60% in 2030, compared with vehicles sold in 2020, and to achieve 50-52% net economy-wide greenhouse gas emission reductions below 2005 levels in 2030.
Although almost the entire US auto market has supported the move, constraints on the supply of metals and minerals used to produce batteries, charging stations and vehicles remain.
In addition to Tesla and General Motors, signatories to the letter included Alaska Miners Association, American Critical Minerals Association, American Exploration & Mining Association, American Lithium Corp., American Rare Earths Ltd., Arizona Mining Association, Battery Materials & Technology Coalition, Coeur Mining, Colorado Mining Association, First Mode, GraphiteOne, Hecla Mining, Idaho Mining Association, Ioneer USA, Jervois, Liebherr, Lithium Americas, Lundin Mining – Eagle Mine, Materion Natural Resources, NioCorp Developments Ltd, Metallic Minerals Corporation, Mining Minnesota, Montana Mining Association, MP Materials, National Mining Association, Nevada Battery Coalition, Nevada Mining Association, NewRange Copper Nickel, Nyrstar, Perpetua Resources, Piedmont Lithium, Ramaco Resources, Rio Tinto, Sibanye Stillwater, Society for Mining, Metallurgy, and Exploration, South32, Talon Metals, Teck Resources, TerraVolta, The Women’s Mining Coalition, U.S. Battery Machine Builders Coalition, USA Rare Earth, LLC, Utah Mining Association and the Zero Emission Transportation Association.
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