Imperial Valley
Lithium Valley
CTR Commences Drill Program at Hell's Kitchen Lithium and Power
Buffett’s Berkshire Hathaway plans lithium extraction from geothermal operations
Overview: BHE Renewables, a wholly owned subsidiary of Berkshire Hathaway Energy, is working on modifying its existing geothermal power plants operating in the Salton Sea for lithium extraction. These power plants are operated by another wholly owned subsidiary, CalEnergy and will serve as the site for BHER’s pre-commercial geothermal brine pre-treatment for the lithium recovery. BHER is working with AquaMin to scale up its lithium recovery technology to process 100 gallons per minute (gpm) of geothermal brine from the Region facilities to recover lithium chloride (LiCl) and convert it into lithium carbonate (Li2 CO3 ) and BHE Renewables currently produces 350MW of its 4,000 MW of renewable power with geothermal generation in Imperial Valley. • Lithium Production Stats - Quantity: BHER’s resources alone could produce as much as 300,000 metric tons per annum (tpa) of high-quality, battery-grade lithium carbonate equivalent (LCE). See graphic for details. Full commercialization would see 60,000 metric tons battery grade lithium hydroxide. For Operating plant:
Potential annual 90 ktpa Li2 CO3 production. For Greenfield plant: potential annual 210 ktpa Li2 CO production. - Which feedstock / minerals / final product: Lithium carbonate • Production Start Date: 5.5 year timeline until full commercialization, measured from end of Q2 2020. Initial operating plant estimated to be operational after 30 months and reach capacity of 1,000mt in the following year. The initial plant will serve as pilot and example for cash generation to validate full scale plant ideas. • Jobs Created: Average monthly construction employment: 230 workers. Full Time Management and Administrative employment: 400 workers. - Berkshire Hathaway estimates that if fully built out, its lithium operations would bring 230 temporary construction jobs. • Technology Description: pilot-tested to process 100 gallons per minute (gpm) of geothermal brine from the region facilities to recover lithium chloride (LiCl). Also applying under a Funding Opportunity Announcement to the U.S. Department of Energy to design, build, and demonstrate an innovative lithium hydroxide (LiOH) conversion plant. When complete, the plant will accept approximately five gallons per minute (gpm) of an 8% lithium chloride solution from an adjacent lithium recovery demonstration facility funded by the California Energy Commission (CEC). Via electrolysis, the proposed plant will convert this solution into approximately 25kg/hour of the 99.5%-pure lithium hydroxide monohydrate (LiOH-H2O) for quality validation testing by a major manufacturer of electric vehicle batteries. • Bottlenecks: - Technological: The brine that comes from the ground, cycles through a geothermal plant and returns to ground at a very high temperature (difficult to separate the impurities). The brine is very saturated with impurities — usually the 330ppm brine would be solid but because of the high temperature it’s a liquid. Brine includes unwanted silica and iron oxide. They have the technical capability to deal with this but it still presents a challenge. - Regulatory/permitting challenges should not be an issue because the geothermal plants already exist and they have support from a very strong player in the region, IID. However, they are being considered a potential bottleneck regardless. - Would like more state guidance regarding these questions: If California moves to become a major lithium producer, which agency oversees this? Would the Blue ribbon commission help guide this process, eliminate red tape? - Timeline: Covid-19 has not caused any delays for BHE Renewables’ project. • Additional Economic Benefits: Potential to generate indirect funds for Salton Sea environmental hazard mitigation
EnergySource Minerals
Overview: EnergySource Minerals is a privately held company developing lithium projects in Imperial Valley’s Salton Sea, as well as other brine resources. The company is developing its first project alongside the John L. Featherstone geothermal plant.
• Lithium Production Stats - Quantity: 19,000 tonnes per year as lithium hydroxide - Which feedstock / minerals / final product: producing lithium hydroxide but also will produce mineral coproducts that are commercially extractable (currently no firm estimates but this is expected to represent incrementally more jobs and tax base). • Production Start Date: target is construction in the middle of 2021 with a two-year construction schedule. Lithium supplies will be online by 2023. The schedule has been slightly delayed due to the pandemic. Project timeline and supply/demand curves have shifted but the long-term projections remain the same as pre-pandemic. • Jobs Created: Lithium hydroxide production will have direct employment on site of 60 people. Indirectly, there will be a large multiple effect from surrounding sectors of support including transportation, maintenance and outside services. • Technology Description: EnergySource Mineral’s extraction process, relies on commercially proven technologies to extract lithium under 300mg/L in Salton Sea brines, which are lower concentration than conventional brine resources in South America. EnergySource Minerals has integrated hydrometallurgical techniques, a proprietary lithium selective adsorbent, and state of the art crystallization approaches to achieve battery grade lithium hydroxide. They have already tested this process with geothermal brines and have completed an engineering package. The advantage of this technology is it will make this process more cost efficient. Major elements of EnergySource Mineral’s technology platform can be applied to any lithium brine resources and will serve as a model for future projects around the world. • Business Model Information: Co-produced minerals from brine resource from Featherstone Geothermal Plant — environmental footprint has already been made. There is no need to consider wetlands or endangered species mitigation concerns because they are on an existing industrial site. - There is a hope that California will incentivize companies to source locally (which could be in the form of tax breaks or a credit system) to align more with the entire value chain from the standpoint of entering the California market. • Bottlenecks: Covid-19 has pushed back the schedule by about half a year. - Making partnerships with cathode manufacturers and OEMs has been challenging because of the uncertainty surrounding new resource supply. - Regulatory: This is less of an issue for ESM in the Salton Sea because they are retrofitting an existing industrial site. • Additional Economic Benefits: It is estimated that the plant will generate over $25 million per year in direct economic benefits to the local community including employee salaries, royalties, utilities, and taxes. The annual maintenance program for the plant will generate an additional $60 million each year for the community.
LITHIUM VALLEY OVERVIEW
1. The Salton Sea
The Salton Sea is California’s largest inland body of water. The current iteration of the sea was formed in 1905 when the Colorado River flooded the seabed, known as the Salton Sink, located in California’s Imperial and Coachella Valleys. However, according to the Salton Sea Authority, there is geologic evidence that this Salton Basin hosted intermittent lakes over the past millennia.63 The Salton Sea was once a tourist destination in the mid 20th century before it was overflowed with nutrient runoff from the surrounding industrial agriculture of the region. Now, the region around the Sea is a unique asset to the region — yielding renewable energy, critical mineral resources as well as crippling environmental hazards. The Salton Sea hosts 11 geothermal energy plants that provide renewable energy to the surrounding region of Imperial Valley, California and neighboring States. However, the Salton Sea’s playa — which has emerged from the recession of the Sea—has also contributed over recent decades to air quality hazards for those same communities.
2. Salton Sea Environmental Status
The recession of the Salton Sea has accelerated the release of toxic materials from the playa. The Salton Sea is positioned in the valley of an agricultural region, and includes arsenic and selenium in its sand. This qualifies the Sea as a toxic waste location due to agricultural runoff including chromium, zinc, lead, and pesticides. As the Salton Sea water levels fall, the region’s dry winds carry dust particulates from the exposed playa through the air. This phenomenon has caused major air quality challenges for the region of Imperial Valley.64 Evaporation, water conservation efforts and minimal rainfall are rapidly exposing the Sea’s shoreline more and more each year. According to a 2017 study conducted at USC, this issue is directly linked with respiratory health problems in Imperial Valley’s vulnerable populations — particularly the Torres-Martinez and Fort Yuma Quechan Tribal communities and low-wage farmworkers.65 The State of California, in partnership with the Salton Sea Authority, are currently implementing “Phase 1” of the Salton Sea Management Program aimed at suppressing this dust by 2028. However, this environmental justice and public health issue requires immediate and increased mitigation efforts to protect these exposed communities.
3. Imperial Valley — Local Economy
The Imperial Valley includes some of the most economically disadvantaged communities in California. A high percentage of the labor force works in agriculture, and farming is a major source of the region’s income. The Covid-19 pandemic has had a particularly difficult impact on the Imperial Valley, with the civilian unemployment rate climbing to 27.8% as of May 2020.66 Based on statistics collected from the State of California’s Employment Development Department, this is an increase from 16.5% in May 2019. Compared to the California unemployment rate of 15.9% May 2020 (up from 3.6% May 2019) and national unemployment rate of 13.0% in the same period, the jobs in Imperial Valley have been hit especially hard during this recession. In the farming sector specifically, in May 2020, there were 10,000 jobs compared to the 12,200 jobs in May of 2019 — an 18% decrease from the previous year.67 The pandemic has economically battered this already vulnerable population on an individual and community wide basis with unemployment and decreased local revenue. On a broader scale, the municipalities and State-sanctioned funds for Imperial Valley are struggling to cover the costs of the Salton Sea Management Plan to address air quality issues in the region. According to a study by the Resilience Alliance,68 the Salton Sea Management Plan lacks appropriate funding and progress for a long-term air quality solution. Thus, community engagement and stable local revenue streams are vital to protect the disadvantaged populations of Imperial Valley and ensure they do not bear the burdens of climate change. The air quality issues associated with the Salton Sea need urgent attention and a steady funding stream to ensure they are addressed.
4. Existing Geothermal Power Production
Existing geothermal energy plants operating in the Salton Sea have brought environmental and economic benefits to the region. In terms of environmental benefits, these geothermal plants have been constructed to cover exposed playa — helping to reduce the issue of toxic dust blowing through the air. In addition, the companies operating these plants are required to perform air quality mitigation measures as part of the permitting process. The plants provide jobs and income for the community members of Imperial Valley. The energy produced in these plants is completely renewable and generated around the clock. The geothermal energy produced in the Salton Sea serves California’s goal of 50% renewable energy by 2030 and 100% by 2045. More geothermal energy could help support the grid by providing power at all times of the day, replacing the energy and capacity lost when the Diablo Canyon nuclear units retire in 2024 and 2025.69 There are 11 geothermal plants currently operating in the Salton Sea Known Geothermal Resource Area. This land is located at the south east corner of the watershed and primarily owned by the Imperial Irrigation District, the public utility provider in the region. These plants have a combined capacity of approximately 345 net megawatts of geothermal energy.70 However, there’s an estimated additional 2,000 megawatts of untapped geothermal energy potential in this area.71 The energy produced at these plants is distributed throughout the southwestern states in the US. Ten of the eleven geothermal plants are owned by CE Energy and operated by CalEnergy Operating Corporation, a subsidiary of Berkshire Hathaway Energy. These ten plants sell power to Southern California Edison Company, City of Riverside, Salt River Project, Sacramento Municipal Utility District, Imperial Irrigation District (IID) and Arizona Public Service. The energy is delivered to these customers on transmission lines owned and operated by the IID. The remaining plant is owned and operated by EnergySource; currently under a 30-year Power Purchasing Agreement with the Salt River Project, a power and irrigation district in Tempe, Arizona. Additionally, the Australian-based company, Controlled Thermal Resources recently signed a 25-year Power Purchasing Agreement with the IID in exchange for land they’ve leased for their planned Hell’s Kitchen plant.
5. Lithium Valley Vision
The vision for Lithium Valley includes the development of a world-class, environmentally sustainable battery materials manufacturing ecosystem in California, positioning the Imperial Valley as the epicenter and leader in this field. If done collaboratively with the community, this initiative will also establish long-term equitable benefits for the Imperial Valley and Salton Sea communities. The project is oriented around maximizing investment, tax revenue, and jobs for the community of Imperial County, one of the most economically disadvantaged in California. The plan is to co-produce renewable energy and lithium from geothermal plants operating in the Sea. Currently, there are three companies with plans to retrofit existing and build new geothermal energy plants with safe and clean mechanisms for lithium extraction. As the electricity market continues its transition toward renewables as the most viable option for power production, Imperial Valley can build on its status as a leader in clean geothermal power production by leveraging that resource to produce low-emission lithium recovery. Further, the production and commercialization of lithium from geothermal plants will amortize the fixed cost of geothermal energy production over a wider revenue range. Three companies have proposed investments which provide thousands of community jobs, dozens of factories, and related businesses downstream. When fully realized, this project has the potential to act as a public-private partnership that ensures that many of the advantages associated traditionally with resource recovery—such as any potential royalties and tax revenue — are tied to benefits that go directly to the community, the ecosystem, and local tribes. These long-term goals will begin with the construction and retrofitting of geothermal energy plants operating in the Salton Sea to include technology and infrastructure for lithium recovery. The three companies with existing geothermal plants and plans, Controlled Thermal Resources (CTR), Berkshire Hathaway Energy (BHE) and EnergySource Minerals (ESM), are already in the process of planning and testing this co-production of renewable energy and critical minerals. The economic, environmental, political and national security advantages resulting from this development could situate the U.S. and California as pioneers in electrified transportation development. There are, however, several barriers that must be addressed for these plans to come to fruition. Additionally, there are many stakeholders that will need to be part of properly executed planning and execution phases.
6. Economic and Jobs Opportunity
Lithium Valley comes with the potential for strong economic and employment opportunities for Imperial Valley and the State. Direct job numbers expected to be created from the Salton Sea lithium recovery projects are detailed below in the company descriptions. However, the creation of indirect jobs — jobs that emerge as a result of the projects’ direct jobs — could add further to those totals. Geothermal plant direct/indirect job numbers/Labor The International Brotherhood of Electrical Workers (IBEW) and communities of Imperial Valley have sought to ensure that the labor force is hired locally. In addition, these groups also have expressed an interest that projects abide by public safety standards, metal labor standards and provide onsite workforce training. The people operating and maintaining the facilities need to be provided the necessary skills to safely maintain these facilities. The IBEW ensures that local infrastructure exists for training the workforce necessary for this initiative.
7. Government Initiatives
The following are current policy and financing initiatives that have been proposed and passed relating to lithium recovery in California and the United States. These initiatives are helping to catalyze Lithium Valley, however it is evident that these are only the first steps. For these projects to garner the momentum they need, California and the Federal government must pass more legislation and create more financing opportunities with domestic lithium extraction as a top priority.
California:
a. AB 1657: State Energy Resources Conservation and Development Commission. Previously AB 3100, Assemblymember Eduardo Garcia’s AB 1657 was passed by the legislature in the 2020 session.72 Assuming it becomes law in September 2020, it will establish a Blue Ribbon Commission on Lithium Extraction in California by March 1, 2021. The Blue Ribbon Commission is tasked to review, investigate, and analyze safe environmental methods for lithium extraction from geothermal brines as well as its processing and production. The Blue Ribbon Commission will deliver a report to the legislature with its findings on or before October 1, 2022. b. Financing/ Incentives Enterprise Zone: Imperial County is designated as a California Enterprise Zone. This means that companies developing projects in this region are eligible for Enterprise Zone tax credits and deductions including: Hiring Tax Credits, Sales and Use tax credit, Business Expense Deduction, Net Interest Deduction for Lenders. These policy incentives could be another facet that attracts development in the low-income communities of Imperial Valley — bringing jobs and revenue along with it. CA Infrastructure and Economic Development Bank (IBank): The Climate Catalyst Revolving Loan Fund was established in January 2020. This revolving loan fund was established to provide capital to shovel-ready projects addressing climate change. California Energy Commission (CEC) Grants: The CEC has held informational workshops and presentations on the Lithium Valley opportunity over recent years. Additionally, the CEC has funded R&D activities to progress lithium recovery technology.
Federal
a. S.3694: Onshoring Rare Earths Act of 2020 (ORE Act): this proposed legislation would amend the Internal Revenue Code of 1986 to permanently allow a tax deduction at the time an investment is made in property used to extract critical minerals and metals from the United States. This bill was proposed by Senator Ted Cruz (May 12, 2020) to include lithium and cobalt as rare earth minerals. This Bill establishes a Secretary of Defense grant program for pilot projects extracting critical minerals (not to exceed $10M) and will incentivize development of Imperial Valley’s lithium deposits. b. H.R.4481 - Securing Energy Critical Elements and American Jobs Act of 2019: Introduced in the House by Rep Swalwell (D-CA-15) in September 2019 and currently being discussed in the House Science, Space, and Technology Subcommittee on Energy. This Bill seeks to develop the United States’ capabilities for production and technology around critical minerals. The Bill would spur research and development for energy critical minerals and ensure that these efforts could not be discontinued by the DOE. c. The House Select Committee on The Climate Crisis published a report in June 2020 discussing different opportunities for clean energy incentives and implementation.
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