According to the news report by Reuters, a division of Berkshire Hathaway Inc. denied that it had reached any kind of an agreement that would lead to the extraction of lithium from its Salton Sea geothermal wells in California.
A spokesperson from Berkshire Hathaway Energy Co., Jessi Strawn responded to Reuter’s emailed query that there was definitely no agreement with anyone which would allow the extraction of any minerals – including lithium – from Salton Sea.
This request was in response to a news report by Financial Times which stated that Berkshire Hathaway Inc. was venturing into lithium and had already signed an agreement to that effect. The publication cited reliable sources that were aware of this matter.
The report by Financial Times (FT) went on to say that through this venture, Berkshire was hoping to extract up to 90,000 tons of lithium carbonate per year. This would be worth about $1.5 billion based on current lithium prices.
The conglomerate was also reportedly holding discussions with Tesla Inc. to supply the electric car maker with the mineral, which is an essential component for the batteries that power its cars.
FT reported that if these negotiations were successful, then American car makers as well as battery makers would be able to get a steady supply of lithium, which would reduce their reliance on the small group of producers in Australia and Chile. Currently, the only place in the US that supplies lithium is the Silver Peak Mine located in Nevada. This mine is owned and operated by Albemarle Corp.
Berkshire Hathaway Energy’s unit, BHE Renewables’ vice president Eric Besseling told FT that they had seen a lot of interest in increasing lithium supplies in North America as more and more auto makers shifted towards electric car manufacturing. However, Besseling refused to comment about the possible deal with Salton Sea.
According to FT, it had seen a fundraising term sheet that claimed that the Salton Sea geothermal wells had the potential to become one of the largest lithium producers in the world. So much so that it could rival the Lithium Triangle controlled by Argentina and Chile.
The price of lithium has fallen by 17% so far this year. This is due to a new entrant in the market – Australia. However, analysts expect the demand for lithium to grow by more than two times by the year 2025 once electric cars become cheaper and the markets move towards mass adoption of the new auto technology.
FT also gave details about the agreement. Berkshire Hathaway Energy had licensed the right to extract the mineral from its geothermal wells to a newly created company called Salton Sea Industries. Reportedly, the new company was looking at raising $20 million via a private funding. The company reportedly estimated that the entire project would cost about $2.5 billion.
According to Besseling stated that initial projections indicated that the cost of producing lithium from the company’s geothermal wells could be as inexpensive as it was to extract the mineral in Chile – if the proposed technology worked. Chile is currently one of the cheapest producers of lithium in the world.
Besseling is also reported to have said that now that the costs of other renewable forms of energy had come down so dramatically, Berkshire Hathaway Energy needed to get more competitive. He said that lithium was 5 times as valuable as power.
Reuters had also gotten in touch with Tesla to verify that the company was in talks with Berkshire Hathaway about a lithium supply, however, the electric car company did not respond to a request for a comment at press time.