The Minerals Depletion Allowance: Its Importance In Nonferrous Metal Mining

Once again, the United States Congress is debating the minerals depletion allowance. If the past is any indication, the debate will quickly become politicized. Representatives of the densely populated but mineral-poor Northeast will no doubt claim that percentage depletion is sheer robbery of tax dollars perpetrated by corporations to line the pockets of wealthy investors. Many southern and western legislators, on the other hand, will portray the depletion allowance as our only savior from mineral deprivation, blackmail from foreign producers, and a stone-age nonmineral existence. Although this characterization of the usual minerals depletion debate may be overstated, the most unfortunate aspect is that the genuinely important role of the depletion allowance in domestic minerals production is often obscured in congressional hearings. This article will try to provide a basic understanding of the minerals depletion allowance, the underlying rationale, and the increasingly important role the allowance will play in the future. Although the discussions and conclusions can be extended to the metal mining industry in general, most of the examples are drawn from the copper industry.