/>iOn July 4, 2025, the One Big Beautiful Bill Act (H.R.1) (the “OBBB”) was signed into law by President Trump. This comprehensive budget reconciliation bill includes provisions related to tax policy, federal spending, healthcare, border security, energy, and more.
Notably, the OBBB amends Section 45X of the Internal Revenue Code, known as the “advanced manufacturing production credit.” Originally introduced in the Inflation Reduction Act of 2022 (the “IRA”), Section 45X provides a tax credit to manufacturers for producing certain critical components (“eligible components”) used in clean energy technologies, such as solar cells, wind turbine blades, and battery components and companies that mine or process applicable critical minerals.
Pursuant to the IRA, the term “applicable critical mineral” includes: aluminum, antimony, barite, beryllium, cerium, cesium, chromium, cobalt, dysprosium, europium, fluorspar, gadolinium, germanium, graphite, indium, lithium, manganese, neodymium, nickel, niobium, tellurium, tin, tungsten, vanadium, and yttrium.
Additionally, any of the following minerals are eligible if purified to a minimum purity of 99 percent by mass: arsenic, bismuth, erbium, gallium, hafnium, holmium, iridium, lanthanum, lutetium, magnesium, palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, terbium, thulium, titanium, ytterbium, zinc, and zirconium.
The OBBB adds metallurgical coal to the list of “applicable critical minerals,” making it eligible for the Section 45X tax credit. This addition is consistent with previous presidential actions aimed at promoting coal production, including under the Reinvigorating America’s Beautiful Clean Coal Industry and Amending Executive Order 14241 executive order, directing the Chair of the National Energy Dominance Council (NEDC) to designate coal as a “mineral,” under Executive Order 14241 entitling it to all the benefits of a “mineral” under that order and directing the heads of the Departments of Energy and the Interior to consider whether coal used in the production of steel qualifies as a “critical material” to be placed on the Department of Energy Critical Minerals List and the Department of the Interior Critical Minerals List.
Under the OBBB, the term “metallurgical coal” means “coal which is suitable for use in the production of steel (within the meaning of the notice published by the Department of Energy entitled ‘Critical Material List; Addition of Metallurgical Coal Used for Steelmaking’ (90 Fed. Reg. 22711 (May 29, 2025, regardless of whether such production occurs inside or outside of the United States.”
The amount of the Section 45X tax credit for metallurgical coal is equal to 2.5% of the costs incurred by the taxpayer with respect to the production of such metallurgical coal. The Section 45X tax credit will be available for metallurgical coal produced in 2026 through 2029.
The OBBB also adds phase-out provisions for Section 45X tax credits for producing other applicable critical minerals, which were permanent under the IRA. The amount of the Section 45X tax credit for applicable critical minerals, other than for metallurgical coal, is generally equal to 10% of the costs incurred by the taxpayer with respect to the production of such critical mineral. Under the OBBB, the amount of the tax credit for such other applicable critical minerals is phased down to 7.5% of eligible costs in 2031, 5% of eligible costs in 2032, 2.5% of eligible costs in 2033, and zero thereafter.
The addition of metallurgical coal to Section 45X aligns with the Administration’s broader initiative to increase American mineral production and promote coal production. However, the phase-out of credits for the mining and production of other critical minerals may result in uncertainty for companies planning mining projects or new processing facilities.
