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LINCOLN – Nebraska Republican U.S. Rep. Adrian Smith is proposing additional tax relief aimed at increasing American production of minerals used in electronics, including microchips.
The legislation aims to increase the “depletion allowance” for producers of rare earth materials and scandium from 14% to match the tax break enjoyed by producers of minerals deemed the “highestpriority,” which is 22%.
The “depletion allowance” is a tax break that allows companies that mine the materials to “recover a percentage of gross income.”
Smith, a senior member of the House’s tax-writing Weighs and Means Committee, represents Nebraska’s largely rural 3rd Congressional District.
He introduced the measure along with California Democratic Rep. Jimmy Panetta and Pennsylvania Republican Rep. Guy Reschenthaler.
“Embracing our nation’s full capacity to produce critical minerals at home is essential to growing our economy,” Smith said in a statement.
Rare earth materials and scandium are used in a wide variety of technologies, from smartphones to electric vehicles, wind turbines and even jet fighters.
The 17 types of metals known as “rare earth” minerals are actually quite common and mined globally, but China has cornered a near-monopoly on refining these minerals.
Nebraska has a rare-earth mine in the southeastern part of the state that is home to the second-largest deposit of rare earth elements in the U.S. The mining company, NioCorp, plans to ramp up preconstruction efforts. The other mine is in Montana.
China, earlier this year, paused the export of several rare earth minerals and metals as a response to President Donald Trump’s tariffs on Chinese goods. In April, Ukraine and the U.S. signed an agreement granting the U.S. a stake in its mineral reserves in exchange for tacit security guarantees against future Russian aggression.
