H.R. 4772: Critical Minerals Investment Tax Modernization Act of 2025

The bill titled the Critical Minerals Investment Tax Modernization Act of 2025 seeks to modify the U.S. tax code concerning the extraction of certain minerals deemed critical for various industries. Here is a breakdown of its main components:

Purpose of the Bill

The main aim of the bill is to encourage investment in the mining and extraction of specific rare earth minerals by adjusting the tax benefits related to these activities. This step is believed to help boost domestic production and reduce reliance on foreign sources for these essential materials.

Key Adjustments

• The bill proposes to amend the Internal Revenue Code to include a new 22% depletion rate specifically for certain rare earth elements. This includes the 15 lanthanide elements, as well as scandium.
• Depletion rates allow companies to deduct a portion of the extraction costs from their taxable income, which can improve their profitability and encourage more investment in mining operations.

Impact of the Change

By establishing a higher depletion rate, the intention is to make it financially more appealing for companies to engage in the extraction of these minerals domestically. This could potentially lead to:

• Increased domestic production of rare earth minerals.
• Greater investments in mining technologies and infrastructure.
• Enhanced competitiveness of U.S. companies in the global market for rare earth materials.

Effective Date

The changes outlined in the bill would take effect for taxable years starting after the bill is enacted into law.

Relevant Companies

• MP Materials Corp (MP): As one of the leading producers of rare earth materials in North America, MP Materials may benefit from the increased tax incentives, making their extraction operations more profitable.
• Rare Element Resources Ltd. (REE): This company focuses on the exploration and development of rare earth mineral properties and could see increased investment interest due to the adjusted tax rates.
• Avalon Advanced Materials Inc. (AVL): Avalon is involved in the mining of rare metals and minerals and may benefit from the financial incentives provided by the new depletion rate.