Issue 13: California’s $400 million bet on the Lithium Valley
Gov. Gavin Newsom’s latest budget proposal includes almost half a billion dollars in state funding to help speed up development of lithium extraction in the Imperial Valley.
Fresh this Week:
Up to $400 Million from the State Headed to the Lithium Valley
The state of California might just make a $400 million bet on the Lithium Valley.
Gov. Gavin Newsom last Friday unveiled his latest budget proposal for the upcoming fiscal year, which begins in July, and it includes almost half a billion dollars in state funding to help speed up development of lithium extraction in the Imperial Valley.
The Desert Sun, once again, has an excellent break down of how those $400 million will be spent:
An estimated $80 million is earmarked for a new Brawley expansion of San Diego State University specializing in STEM majors like mining, geology, engineering, construction and related workforce education.
The budget revision requests up to $250 million for clean energy projects, with priority given to transmission lines from Salton Sea projects that also have private and U.S. Dept. of Energy backing.
Other measures include $45 million in possibly forgivable loans or sales and use tax exclusions for lithium research and development.
Another $5 million would go toward a request from Imperial County for help in completing a specific plan and sweeping environmental impact report for the lithium and geothermal development area.
In addition to that funding, The Desert Sun reports that developers could have access to $1 billion more in "green energy" tax credits in coming years.
The state of California has a budget surplus of nearly $100 billion, which is more than enough to fund all sorts of programs and needs throughout the state.
It is also worth noting that the county of Imperial is seeking $25 million from the state for additional infrastructure like the construction of roads that connect the south shores of the Salton Sea with Mexico.
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State vs. Local Control of Lithium Taxing and Environmental Impact Reviews
One potentially thorny issue to arise out of Gov. Gavin Newsom’s budget proposal pertains to the way lithium could be taxed. Imperial County officials have proposed to have autonomy when it comes to taxing lithium productions in the county.
However, Newsom’s budget proposal last Friday indicates the state might have a different idea.
The Desert Sun reported that Newsom’s budget package “calls for a new fee per ton of lithium produced, with 80% of the revenues going to Imperial County and 20% to state coffers to help restore the badly drying Salton Sea.”
This not only gives us a clearer picture of how the state might divide tax revenues generated from lithium production, but it also tells us that it might become a thorny issue since lithium project developers have previously expressed no interest in being taxed twice.
In a meeting with Calipatria residents and leaders, Assemblyman Eduardo Garcia shed light on the environmental impact review process that companies must undergo before building new facilities in the state. Imperial County officials want to have autonomy to allow a blanket process for the entire zone, as opposed to one per project.
But Garcia said that would be unlikely.
Newsom Proposes $80 Million for SDSU Campus in Brawley
To help meet the demand for technical workers in the emerging lithium industry, San Diego State University is seeking to expand its presence in the Imperial Valley. And the state of California seems to want to help.
Newsom’s budget proposal includes $80 million to help SDSU build a 65,000-square-foot science and technology facility on its existing campus on the outskirts of Brawley.
The university says it has already invested $15 million toward the proposed Innovation Campus, which will house science, technology, chemistry, engineering and mathematics programming.
SDSU lists other specifications in its announcement:
25,000 square feet to be dedicated to labs and core facilities with major instruments, and include space to collaborate with both public and private partners
20,000 square feet of STEM-focused classroom and teaching laboratory spaces
10,000 square feet of office space.
It’s unclear what degrees, specifically, will be offered once the Innovation Campus is built but the university has signaled that the programs will be aimed at preparing Imperial Valley students for the various jobs related to the lithium industry.
Lithium Valley’s Latest Project Updates and Projections
The Desert Sun last Friday gave us perhaps the most up-to-date look at the three companies seeking to extract lithium in the Imperial Valley. Berkshire Hathaway Renewables, EnergySource and Controlled Thermal Resources are each in different stages of development but the earliest we might see commercial-level production of lithium might not come until 2024.
Lithium experts outside of the Imperial Valley are skeptical that commercial-scale production of lithium in the Salton Sea will be done in such a short period of time — some argue that it takes between 5 to 7 years to get geothermal lithium extraction production going.
But the three companies have expressed confidence, time after time, in not only that their vision will come true but that it will come in the timeline they project.
Here’s a few takeaways from the Desert Sun story:
BHE Renewables is currently developing the second demonstration project, which will convert the lithium chloride into battery-grade lithium carbonate. That demonstration project is expected to come online in spring 2023.
Construction of BHE's first commercial-scale plant could begin as soon as 2024.
Controlled Thermal Resources’ Hells' Kitchen project has applied for county approvals for a 49.9 megawatt geothermal plant and a related lithium plant that could produce 20,000 tons of the highly sought after mineral annually by 2024.
EnergySource has a conditional use permit from the county and the company just has a few “contractual hurdles” to address before potentially starting construction this summer “if everything goes perfectly,” its CEO said.
If construction goes as planned, EnergySource's Project ATLiS could be operational in 2024, and it estimates that it could produce 20,000 tons a year of lithium hydroxide monohydrate.
The company closest to the starting line is EnergySource, which could begin construction of the nation's first commercial-scale brine to lithium plant this summer.
Movements to Watch
The Lithium Valley Commission’s next meeting will be on Thursday, May 26, inside the library at Calipatria High School. The meeting will also be available via Zoom.
Want to join the discussion on developments of the Lithium Valley? Join the Facebook Group and subscribe to this newsletter for a fresh batch of news every Friday.