H.R. 8780: Critical Mineral and Extraction Tax Parity Act

This bill, titled the Critical Mineral and Extraction Tax Parity Act, proposes several modifications to the tax code concerning critical minerals and extraction processes. The key points of the bill include:

Expansion of Eligible Minerals

The bill aims to expand the list of critical minerals that qualify for tax credits under the Internal Revenue Code. Specifically, it adds the following minerals:

• Boron
• Copper
• Lead
• Metallurgical coal
• Potash
• Rhenium
• Silicon
• Silver
• Uranium

Additionally, it specifies conditions for phosphate to be eligible, indicating that it must be converted to either phosphoric acid or phosphorus with high purity, or purified phosphate rock suitable for phosphoric acid production.

Inclusion of Extraction Costs

The bill allows taxpayers who extract ore that is then refined into critical minerals to include their extraction costs in the advanced manufacturing production credit. This means:

• Taxpayers can claim extraction costs if they provide certification that the ore was refined into a qualifying critical mineral and sold to an unrelated party.
• Extraction costs will only be applicable if the ore was extracted in the U.S. or if extracted abroad, it must not be from a foreign country of concern and should not be commercially extracted in the U.S.

Repeal of Credit Reduction for Metallurgical Coal

The bill removes a previous provision that reduced the credit amount for metallurgical coal, thus potentially increasing the tax benefits for producers of this mineral.

Effective Dates

The provisions from the bill will take effect for minerals produced and sold after December 31, 2025. This timeline is applicable for both the amendments regarding the inclusion of additional minerals and the inclusion of extraction costs.

Relevant Companies

• FCX - Freeport-McMoRan Inc.: A major player in copper production, which might benefit from the extension of tax credits for additional minerals including copper.
• CLF - Cleveland-Cliffs Inc.: Involved in iron ore and metallurgical coal, the repeal of the credit reduction for metallurgical coal could enhance their tax benefits.
• CCJ - Cameco Corporation: Engaged in uranium production, this bill could provide a favorable tax environment for their operations.