Illustration: Tiffany Herring/Axios
The Treasury Department is irritating some in the mining industry with its implementation of the IRA's advanced manufacturing tax credit.
Why it matters: The language would put guardrails on the mineral aspects of the credit to protect against double-dipping.
Driving the news: Treasury released proposed rulemaking text Thursday clarifying regulatory definitions that were necessary for companies to know if they qualify for the tax credit, which is known as 45X.
- Treasury outlined what business expenses will count toward a 10% write-off for producers of "critical minerals" and electrode active material (a.k.a. stuff used to make battery cathodes and anodes).
- The agency said a wide range of costs faced by companies would apply, including overhead, labor and electricity.
- But the specific cost of the direct extraction of raw materials won't count toward the credit.
Zoom in: Treasury decided not to include direct extraction for multiple reasons, including to avoid credits getting counted more than once.
- "If material costs are included in production costs for an applicable critical mineral … such material costs could make up a significant share of the cost of producing the applicable critical mineral," the department said in the proposal.
- It's taking comments on how to include those costs in the future without such risks.
What they're saying: The National Mining Association, which represents coal and hardrock mining companies, didn't get what it wanted with this language.
- "This guidance fails to uphold Congress's intent to incentivize the secure and reliable mineral supply chains we need," NMA president Rich Nolan said in a statement.
The other side: The BlueGreen Alliance, a coalition of labor and environmental groups, cheered the guidance.
- "The Department of the Treasury has done an excellent job setting this program up for success. I can't think of a better way to wrap up the year," executive director Jason Walsh said.
Zoom in: Treasury also clarified an apparent issue with the IRA's definition of graphite for the purposes of using the credit.
- As we told you, battery component manufacturers were concerned the definition in the statute did not align with industry practices.
- Treasury now says the statutory definition — "99.9% graphitic carbon by mass" — means graphite that is 99.9% carbon by mass, because that's what is "used in electric vehicle batteries" and "other energy sector applications."
