From Cornfields to Critical Metals: Nebraska's Tax Gambit Goes Strategic

Highlights

• Bipartisan bill seeks to raise depletion allowance on rare earths from 14% to 22% to make U.S. mining projects more competitive.
• NioCorp's Elk Creek project in Nebraska represents a significant rare earth deposit with potential for increased financial viability.
• Tax breaks alone won't solve U.S. rare earth dependency; downstream processing infrastructure remains a critical challenge.

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Rep. Adrian Smith (opens in a new tab) (R-NE)wants to supercharge American rare earth output—by rewriting thetax code. His new bipartisan bill would raise the depletion allowance on rare earths and scandium from 14% to 22%, matching the top tier given to priority minerals like lithium. Co-sponsored by Reps. Jimmy Panetta (D-CA) and Guy Reschenthaler (R-PA), the bill aims to make U.S. projects more financially attractive in a China-dominated market.

Rep Adrian Smith (R-NE)

Strategic Metal, Strategic Play

Rare earths power everything from EVs to missiles—and China still refines nearly all of them. NioCorp’s Elk Creek project (opens in a new tab) in Nebraska claims the second-largest U.S. deposit, with a mix of rare earths, niobium, and scandium. The tax boost could improve margins for U.S. miners trying to compete without Chinese-scale subsidies.

The Project

Hopeful Headlines, Missing Details

The article via the Nebraska Examiner (opens in a new tab) implies tax breaks alone will “increase American production,” but skips the hard numbers. NioCorp hasn’t broken ground yet, and financing delays remain a hurdle. Even if mining begins, where will the material be refined? Without U.S. downstream infrastructure, raw ore doesn’t become functional tech.

The piece mentions China pausing rare earth exports over Trump’s tariffs. True—sort of. China has tightened controls, but there’s no formal blanket pause. The levers are selective, strategic, and opaque—classic Beijing.

Boosting depletion allowances is smart—but it’s not a game-changer. The real bottleneck is processing, not just digging. Until the U.S. builds out full mine-to-magnet capabilities, even the best tax tweaks won’t shift global dependence.

Smith’s bill is a welcome sign of bipartisan momentum—but let’s not mistake it for industrial liftoff. Investors should view this as one small piece of a much larger puzzle.