Senate committee reviews bill for rare earth mineral extraction from North Dakota coal

The North Dakota Senate Energy and Natural Resources Committee convened on March 27, 2025, to discuss critical legislation concerning the extraction of rare earth elements and critical minerals from coal. The meeting focused on clarifying definitions and implications of the proposed bill, particularly regarding the extraction process and the treatment of existing coal leases.

The session began with Mr. Straley addressing concerns about the bill's language, specifically whether it included fly ash in the extraction process. He clarified that the bill was intended to focus solely on coal, excluding any references to coal ash. This distinction was crucial for the committee's understanding of the bill's scope.

Discussion then shifted to the definition of "net profits" as it pertains to the sale of extracted minerals. Senator Behm highlighted the need for clarity in the bill, emphasizing that net profits should reflect gross receipts minus specific costs related to extraction and processing. Straley assured the committee that the intention was to create a fair framework for determining profits while acknowledging the complexities involved in the extraction process.

The committee also explored how rare earth elements would be marketed. Straley explained that these elements could be sold in various forms, including by the pound or ton, depending on the specific mineral. He noted that the current market is heavily influenced by international dynamics, particularly China's control over rare earth elements, which adds another layer of complexity to the discussion.

Senator Inghitt raised questions about the density and prevalence of rare earth elements in North Dakota's coal. Straley admitted that the data on these elements is variable and that ongoing geological studies are necessary to better understand their distribution.

The committee addressed the implications of the bill for existing coal leases. Straley confirmed that the legislation would allow for the transfer of rights to rare earth elements along with coal leases, even for contracts that extend decades into the future. This provision aims to ensure that mineral owners receive royalties from any extracted elements, establishing a 2.5% net profit royalty structure.

As the meeting progressed, the committee acknowledged the need for further refinement of the bill to ensure fairness for mineral owners and clarity in the extraction process. Straley expressed a commitment to working collaboratively with stakeholders to address any contentious issues that may arise.

In conclusion, the meeting underscored the North Dakota legislature's efforts to navigate the complexities of mineral extraction from coal while establishing a regulatory framework that supports both economic development and fair compensation for mineral rights owners. The committee plans to continue refining the bill and addressing stakeholder concerns in future sessions.