Imperial County Backs Lithium Flat Tax Proposal | News & Community

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This story was published on June 21, 2022 by the Chronicle of Calexico.

A California bill proposing to tax lithium production in the state on a per-ton basis is finding both support and opposition in Imperial County ahead of a vote in the Legislative Assembly, possibly this this month.

At least two companies seeking to mine lithium in the Imperial Valley near the southeastern end of the Salton Sea publicly oppose the lump sum tax, saying it threatens to halt its project and delay the promise jobs and an economic boon.

On the other hand, Imperial County and a newly formed coalition of labor, environmental, public health and business groups in the Imperial Valley say they support her.

“From a business perspective, this is going to hurt the valley,” said Rod Colwell, chief executive of Australia-based Controlled Thermal Resources, referring to the proposed flat-rate lithium tax circulating in Sacramento. If the proposal is approved, Colwell said it could harm the viability of his company’s lithium project.

Colwell said his company and others in the industry oppose it and are urging Gov. Gavin Newsom’s office to consider a tax based on a percentage of gross sales instead.

Controlled Thermal Resources and two other companies say they are close to extracting lithium at a commercial level from geothermal brine at the northern end of Imperial County. At least one has plans to produce enough battery-grade lithium to sell to manufacturers as early as 2024.

But as of Monday, June 20, Sacramento state leaders were still negotiating a trailer bill that proposes a lithium tax based on every ton produced in California. Newsom’s office and Assemblyman Eduardo Garcia, D-Coachella, are involved in the negotiations, and the wording of the proposal may not be finalized until later this week.

To pass, the bill requires a two-thirds vote of the Legislative Assembly. A vote could take place as early as next week.

Although the bill does not specify how much money each ton of lithium the state would impose, an industry executive said The desert sun the figure has been suggested as low as $800 per ton.

An isolated Controlled Thermal Resources well is on site near where the company’s proposed Hell’s Kitchen geothermal power plant and lithium mining will be at the southeastern end of the Salton Sea. | Photo by Luis Gomez

Eric Spomer, chief executive of San Diego-based EnergySource, told The Desert Sun that such a flat tax on every ton of lithium produced was still excessive.

EnergySource recently launched a public relations offensive, sending Imperial Valley residents a letter opposing the proposed lump sum tax, saying it “could very well end the potential for geothermal lithium production in the county.” from Imperial before we could even start”.

The letter, signed by EnergySource COO Derek Benson, is also a call to action on behalf of the lithium industry.

“We need your help today. We need you to reach out to leaders in the state legislature, including our local state officials, and demand a fair and flexible tax that secures local revenues and advance California’s electric vehicle, emissions and climate goals,” the letter reads. .

EnergySource also reportedly called residents.

Spomer and an executive from Berkshire Hathaway Energy did not respond to a request for additional comment.

The question of how to tax lithium production in California is the latest development in an emerging green industry driven by growing demand for electric vehicles and, by extension, the lithium-ion batteries that power them.

Imperial County could soon become a source of battery-grade lithium for electric vehicle manufacturers in the United States if one of the three companies – Controlled Thermal Resources, EnergySource and Berkshire Hathaway Energy – succeeds in producing it in large quantities. .

The three companies propose to do this by pumping millions of gallons of hot geothermal brine to the surface, purifying it and extracting the lithium mineral through a complex chemical process. The steam generated from the hot brine would also be used to generate electricity, as has been done for decades in the Imperial Valley.

Unlike other countries around the world, the lithium mining process in Imperial County is different and will not require large excavation pits or football-field-sized evaporation ponds.

So far, the Imperial County Board of Supervisors has lobbied the state for millions of dollars in funding to help industry succeed in the Imperial Valley. The county successfully convinced the state to pay $80 million for a San Diego State University science and technology campus in Brawley to prepare local residents to enter the lithium industry.

Imperial County Salton Sea Area Supervisor Ryan Kelley, who also sits on the state’s Lithium Valley Commission, said he supports a flat per-ton tax on lithium, but pointed out that the county does not was involved in any discussions related to the trailer bill or the tax rate.

“I believe in a fair price and that industry will succeed and thrive in the Imperial Valley. Communities will benefit from this development,” Kelley said.

Additionally, Kelley said he’s not worried about the impact a lump sum tax would have on lithium projects in the Imperial Valley.

“I understand what Rod is saying,” Kelley said of Colwell’s comments about the abrupt halt to his company’s lithium mining project. “And I respect his point of view but I don’t think that’s the case.”

“There is a resource there that will be developed and I hope the companies that are driving this development can work with our community and our county to ensure it has a lasting benefit for everyone involved. “, Kelley said. .

Colwell, on the other hand, said adding a flat tax on every tonne of lithium carbonate equivalent produced would make it more expensive for domestic buyers. Those buyers will then go to China where it is cheaper to mine it, he added.

“It just won’t be viable,” Colwell said. “A commodity, like anything else, on a global scale, it puts China back on the seat. It’s as simple as that.”

When Newsom unveiled his revised budget proposal last month, Garcia and State Sen. Ben Hueso, D-San Diego, said 80% of lithium tax revenue would go to Imperial County and 20% would go to help restore the Salton Sea.

Those in Imperial County support the 80-20 tax revenue disbursement.

But other groups closer to the Coachella Valley — Leadership Counsel for Justice and Accountability and the Sierra Club of California, for example — have lobbied state officials to instead give 70% to the Imperial County and 30% to the Salton Sea.

A newly formed group called the Lithium Valley Community Coalition sent a letter to state lawmakers on Monday offering support for a per-ton lithium tax that it says will support much-needed local infrastructure, services and community projects.

The coalition is made up of local groups like Comite Civico del Valle, Imperial Valley Equity and Justice Coalition, Los Amigos de la Comunidad IV, and several labor groups like IBEW 569 and San Diego & Imperial Counties Labor Council, AFL -IOC.

The letter was addressed to Garcia, Hueso, Senate Speaker Pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon and other key lawmakers.

“These investments, as proposed, will spur the development of Lithium Valley’s new green economy and help the state transition out of its reliance on fossil fuels,” the letter said. “Additionally, stable incomes will also facilitate the creation of much needed road jobs in our region, which has a history of some of the highest unemployment rates in the country.”

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