HB 177-CRITICAL NATURAL MINERALS PLAN AND REPORT  1:37:57 PM CHAIR MCKAY announced the final order of business would be HOUSE BILL NO. 177, "An Act relating to critical and essential minerals and the global energy transition." He said this is the first hearing on HB 177 in House Resources and there would be invited testimony with the intent to hold the bill in committee until the following week. 1:38:40 PM REPRESENTATIVE SADDLER, as prime sponsor, introduced HB 177 the critical and essential minerals legislation. He offered HB 177 as a means for Alaska to be the lead in providing critical and essential minerals to the global market. He defined "essential minerals", as those that are necessary for industry and national defense; "critical minerals" are limited and don't have enough of or don't have reliable or a secure source of. He provided examples of essential minerals like: copper; tin; gold; zinc; graphite; lead; and silver. He also identified several more, lesser-known, essential minerals such as: molybdenum and chromium. He read the rest of the sponsor state [original punctuation provided]: These minerals are fundamental components of many of today's ubiquitous technologies, such as computers and household appliances. To keep our economy and our day- to-day lives moving forward, we need to ensure we have a plan for accessing these critical resources. Demand for critical and essential minerals has increased in recent years and is likely to continue to increase, possibly exponentially as the demand for renewable energy sources grows. Critical and essential minerals are a key element of many emerging energy technologies, ranging from electric vehicles to solar panels. What's more, critical and essential minerals are also increasingly essential components of the high- technology industrial processes and weapons systems that play increasingly important roles in maintaining a strong national defense. Currently, China is home to most of the global market for processing and refining critical minerals, which has concerning implications for the health of our nation's economy, and the strength of our nation's armed services and defense capabilities. It is vitally important that our nation be able to reliably produce such minerals and use them to manufacture technology- forward products and systems. HB 177 helps meet that imperative. It directs the Alaska government to assess the state's potential as an alternative source of these minerals, identify strategies to attract industry investment, and review the possible impacts of potential regulatory regimes. This proposal has the potential to not only decrease our reliance on imported critical minerals, but also increase investment in Alaska's natural resource industry. Alaska has an opportunity to position itself as a competitive source of critical and essential minerals in the global supply chain. HB 177 requires the Departments of Natural Resources and Commerce, Community, and Economic Development to provide the information that industry experts and state officials need to take the next steps toward making Alaska a globally competitive source of critical and essential minerals. 1:42:41 PM KATIE MCCALL, Staff to Rep. Saddler, on behalf of Representative Saddler, gave the sectional analysis for HB 177 as follows [original punctuation provided]: Section 1, Subsection (a) Page 1, Lines 3-15 & Page  2, Lines 1-4  Subsection (a) of HB 177 adds a new section of uncodified law to direct the Office of the Governor to develop a plan for the state to encourage exploration, production, and refining of the minerals needed to support emerging renewable energy technologies. The plan must specifically identify strategies to attract industry investment and position the state's critical mineral production at the center of U.S. production and manufacturing initiatives employing critical minerals. The plan must also review the impacts of various regulatory frameworks on mineral development. Section 1, Subsection (b) Page 2, Lines 5-18  Subsection (b) of HB 177 directs the Department of Natural Resources to provide a report to the Legislature by the start of the legislative session in January 2026 that compares the state's current mineral production and potential future production to national and global production of critical and essential minerals. The report must identify strategies to increase industry exploration and state production of critical and essential minerals in the next three, five, and 10 years. The report must also compare the state's permitting timelines and exploration incentives to those in other jurisdictions. The department may consult with other state and federal agencies, the University of Alaska, industry representatives, and advocacy organizations to compile the required information for the report. Section 1, Subsection (c) Page 2, Lines 19-31 & Page  3, Line 1  Subsection (c) of HB 177 directs the Department of Commerce, Community, and Economic Development to provide a report to the Legislature by the start of the legislative session in January 2026 that identifies the state's role in the global energy transition. The report must include the potential role of Alaska's mineral resources in the supply chain for electric batteries, solar panels, wind turbines, and consumer devices. The department may consult with the appropriate state and federal agencies to compile the required information for the report. The report must include the value of the state's location in the global supply chain and identify strategies for in-state innovation, manufacturing, and transportation for the next three, five, and 10 years. 1:45:38 PM REPRESENTATIVE ARMSTRONG was curious why working with local communities wasn't explicitly written into the HB 177 draft. 1:46:28 PM REPRESENTATIVE SADDLER believed it was written into HB 177 from existing system of legislation but did not see any reason to leave out language that included input from local communities. 1:46:57 PM REPRESENTATIVE ARMSTRONG followed up with the suggestion of adding, "other relevant products that may come up" into HB 177. 1:47:28 PM REPRESENTATIVE SADDLER said he thought it was a good idea in order to keep up with the rate of technology. 1:47:41 PM CHAIR MCKAY opened invited testimony on HB 177. 1:48:15 PM BRENT SHEETS, Director, Petroleum Development Lab, University of Alaska Fairbanks, joined invited testimony via Teams. He explained they are heavily involved in resources issues in addition to petroleum. He informed the committee that the lab is involved in carbon capture and sequestration, small-scale coal technology, and rare-earth mineral projects. He updated the committee that the petroleum engineering program is transitioning to the energy resources engineering program. 1:49:34 PM MR. SHEETS moved to slide 2, titled "Mineral Resources," with a map showing current mines and advanced mineral exploration projects with potential mines highlighted in red. He also emphasized the partnership between the University of Alaska Fairbanks (UAF) and the Division of Geological and Geophysical Surveys (DGGS). He imparted Alaska has numerous untapped mineral resources that could be developed. He cited the recent finds of world-class Germanium and Gallium deposits in Ray River, near the Yukon River, which would be attractive for the state to lease to developers. 1:51:41 PM MR. SHEETS moved to slide 3, titled "Background-Alaska's Critical Mineral Potential," that displayed a bar chart of the underdeveloped critical minerals in Alaska. He said Alaska has the potential to supply most of the commodities shown on the graph, especially zinc, which Alaska in leads market production thanks to Red Dog Mine. 1:53:06 PM MR. SHEETS advanced to slide 4, titled "Applications/Products," that proposed the use of these minerals for magnetic products, metal alloys, defense mechanisms, catalysts, glass and polishing compounds, ceramics and phosphors. 1:53:50 PM MR. SHEETS described slide 5, titled "Carbon Ore, Rare Earth, & Critical Minerals," which outlined the vision to bring Alaska's Carbon Ore, Rare Earth-Critical Minerals (CORE-CM) into perspective and echo the mission to establish a CORE-CM industry in Alaska by working with industry and other stakeholders to identify opportunities and address challenges. 1:54:45 PM MR. SHEETS moved to slide 6, titled "Budget By Phase" outlined three phase of how to compete with China. He posited, Phase 1 is a planning period, Phase 2 and 3 will be a cost challenge but with the partnership and funding with DGGS, UAF can count on an in-kind match. He stressed the importance of that partnership and suggested bringing in the Department of Environmental Conservation for additional input. 1:56:30 PM MR. SHEETS moved to slide 7, titled "Overview," that outlined the Department of Energy and equivalent UAF/DGGS tasks such as [original punctuation provided]: Task 2: Basinal Assessments; Task 3: Waste Stream Reuse; Task 4: Strategies for Infrastructure, Industries and Businesses, Task 5 Technology Assessment, Development and Field Testing; Task 6: AK-TIC and Task 7: Stakeholder Outreach and Education. He pointed out that rare earth elements (REE) are not that rare, but they are difficult to mine economically. 2:02:53 PM MR. SHEETS moved to slide 8, titled "REE Value Chain," that illustrates the progress of value from exploration, to mining, to on-site concentrations, to separation, to metal making and finally, alloy production. 2:05:15 PM MR. SHEETS moved to slide 9, titled "Additional Assets," highlighting additional resources from DGGS such as: ICP-MS installation, hyperspectral imaging, an advanced instrumentation laboratory, bioreactors to separate elements from ores without the use of acids, and the UAS/UAF effort to expand mining training. 2:07:15 PM CHAIR MCKAY thanked Mr. Sheets and expressed his excitement about the subject matter especially for those having visited Iceland and toured the energy infrastructure of that country. 2:08:21 PM REPRESENTATIVE MEARS asked Mr. Sheets if there were requirements for continuing through the phases that would need support from the legislature. 2:08:48 PM MR. SHEETS replied the main one would be able to meet matching funds with DGGS to progress through all of the phases of the budget. He said the department has a 20 percent cost match. 2:10:05 PM REPRESENTATIVE MEARS noticed there wasn't a fiscal note with HB 177. 2:10:31 PM MS. McCALL replied to Representative Mears there are two fiscal notes with the HB 177 legislation. 2:10:49 PM REPRESENTATIVE DIBERT directed her comment towards Mr. Sheets and expressed her excitement and where HB 177 is heading. She asked specifically about the critical minerals in Ray River; if the communities and workforce have a bridge between them to provide local jobs moving forward. 2:12:18 PM CHAIR MCKAY invited more questions; seeing none, he introduced the next presenter Ms. Karen Matthias. 2:13:03 PM KAREN MATTHIAS*, Executive Director*, Alaska Metal Mines*, Anchorage, Alaska {testified in support of HB 177.} She reiterated the increasing demand for essential and critical metals in several sectors of the economy. She warned imports from adversarial countries are a risk, therefore, the United States need more domestic mineral production and Alaska should be part of the solution. She contended the term, "critical minerals", are defined differently by DGGS, DNR and other departments and change through time. Ms. Matthias pointed out the copper is not on the United States Geological Survey (USGS) critical mineral list as an example opposed to the United States Department of Energy. Ms. Matthias emphasized the amount of copper needed to produce clean energy is insufficient to meet the federal government goals. In addition, Ms. Matthias highlighted the rich goal and silver deposits in Alaska. 2:15:30 PM MS. MATTHIAS said there are only a small number of mines which have economic challenges to develop; she suggested a diverse mining economy for the state to succeed. Ms. Matthias advocated for HB 177 to encourage investment, exploration, and production. 2:17:57 PM DEANTHA SKIBINSKI*, Executive Director, Alaska Miners Association*, Anchorage, Alaska {introduced herself to the committee.} 2:20:33 PM CHAIR MCKAY invited questions from the committee for Ms. Skibinski. 2:20:42 PM REPRESENTATIVE MCCABE asked Ms. Skibinski about the weather in Big Lake today. 2:20:53 PM MS. MATTHIAS answered the weather was cold but not as cold as the Lower 48. 2:21:02 PM REPRESENTATIVE MCCABE appreciated this suggestion for the change from transition to expansion and would offer it as an amendment. 2:21:37 PM REPRESENTATIVE SADDLER was amenable to Representative McCabe's amendment and offered the term, "energy addition" as an alternative. 2:21:50 PM CHAIR MCKAY invited online testimony but there was none. He then asked Mr. Sheets to further explain slide 6, "Budget By Phase" expenditures and asked if he was looking for funds from the legislature. 2:23:13 PM MR. SHEETS said the slide pointed out what the "DOE" should be. He attested the State will have to contribute a $1.7 million match in order to meet the proposed 20 percent requirement. 2:24:53 PM CHAIR MCKAY concluded the budget subcommittee work on DNR, we will look under DGGS budget. 2:25:28 PM REPRESENTATIVE BAKER asked Mr. Sheets or the HB 177 sponsor [Representative Saddler] how landowners will be incorporated and wanted to make sure local traditional ecological knowledge is being put into it the legislation. 2:26:38 PM REPRESENTATIVE SADDLER answered DNR has worked very well with local communities, listened to input from tribal organizations and was confident those voices have been heard and incorporated. 2:27:25 PM CHAIR MCKAY thanked the committee, set the amendment deadline for 12:00 p.m. Monday January 22, 2024 and will hold HB 177 in committee for further consideration.