U.S. steps away from flagship lithium project with Berkshire

Oct 5 (Reuters) – In a February assembly with mining executives, President Joe Biden laid out an aggressive objective for the United States to supply extra of its personal minerals for the electrical car revolution in ways in which revered the surroundings.

A “big part” of these efforts, the president mentioned, was Berkshire Hathaway Inc’s (BRKa.N) plan to filter lithium from superhot geothermal brines swirling beneath California’s Salton Sea, one thing that had by no means been completed earlier than.

The project aimed to assist usher in a brand new manner of manufacturing lithium – a key constituent of EV batteries – within the United States whereas avoiding the controversies that come with constructing mines which are typically unpopular with native communities.

The U.S. Department of Energy had chosen Berkshire the day Biden was inaugurated in January 2021 for a $14.9 million grant to review how Salton Sea-region lithium may very well be used to make lithium hydroxide, a specialised kind of the steel that produces extra environment friendly and longer-lasting EV batteries.

“We’re going to set America up to lead the world by building a clean energy economy and a clean energy future,” Biden mentioned on the February occasion, which was billed as a important minerals roundtable.

Alicia Knapp, chief govt of Berkshire’s BHE Renewables division, instructed Biden that Berkshire was “working to secure the most abundant source of lithium in the United States using the world’s most environmentally friendly technology.”

Two weeks later, although, the Energy Department rescinded the grant, in response to emails and paperwork obtained by Reuters, after Berkshire requested what the Energy Department known as a “material change” to its lithium project. The withdrawal of the grant has not been beforehand reported.

While the sum of cash was comparatively small for the mining world and the Salton Sea grant was for a pilot project, the story of Berkshire’s tangle with Washington reveals how Biden’s plan to shift the financial system away from fossil fuels faces some vital technical and enterprise challenges.

Thirteen months of negotiations between the corporate and the federal government, which Reuters is reporting for the primary time, stalled as Berkshire sought management over patents, modifications to know-how, and whether or not it may at some point promote the lithium enterprise, even after the federal government helped construct it, the emails and paperwork present.

Asked concerning the grant withdrawal, a Biden administration official mentioned there are “inherent risks” in funding analysis and improvement tasks, and famous that a number of corporations together with Berkshire are nonetheless engaged on U.S. lithium tasks.

The Energy Department’s March 9, 2022, letter telling Berkshire it was rescinding the grant mentioned the transfer was “the result of a mutual decision” and wouldn’t bar Berkshire from making use of for future federal funding.

Berkshire, nevertheless, is dealing with issues extracting lithium from Salton Sea geothermal brines, in response to three sources with direct information of the operation who declined to be recognized in order to not jeopardize future relationships with the corporate.

In a press release to Reuters, Berkshire mentioned it had deliberate to develop “a first-of-its-kind demonstration plant to produce lithium hydroxide” however “subsequently decided to use a commercially proven process” to supply lithium carbonate as a substitute.

“This change in technology increases the likelihood of success and accelerates the speed to market,” Berkshire spokesperson Dan Winters mentioned. The firm declined to remark for different elements of this story.

‘NASTY, HOT SOUP’

Berkshire operates a number of energy vegetation close to the Salton Sea, roughly 160 miles (258 km) southeast of Los Angeles, the place it flashes steam off brines introduced from deep underground at temperatures round 700°F (371°C) to spin generators that produce electrical energy.

In idea, Berkshire’s plan made sense. Technology for an additional processing step may very well be linked to one of many current vegetation to extract lithium earlier than the brine is reinjected underground. That would keep away from the necessity for open-pit mines or giant evaporation ponds, the 2 most-common however environmentally difficult methods to extract lithium.

From the beginning, Berkshire’s problem was twofold. First, it wanted to separate lithium from that sizzling brine utilizing a commercially unproven class of know-how generally known as Direct Lithium Extraction, or DLE. Then it aimed to develop new know-how to course of that lithium into lithium hydroxide.

For the primary problem, the California Energy Commission gave Berkshire a $6 million grant in May 2020. As a part of its settlement with the state, Berkshire mentioned it will use DLE know-how from one other firm, AquaMin Lithium and Water Recovery Inc.

But corroded tools and clogged pipes from the superhot brine are plaguing the extraction operation, in response to the three sources with direct information. “I think Berkshire has an unsolvable problem,” mentioned one supply, who described the power struggling to get even essentially the most fundamental processing tools to work because of the excessive warmth of the geothermal brines.

AquaMin, a division of privately held Conductive Energy Inc, didn’t reply to requests for remark. The California Energy Commission (CEC) mentioned its funding for Berkshire was not affected by the lack of the Energy Department grant.

The area’s brine teems with lithium, calcium, sodium and different minerals which are very advanced to separate, mentioned Corby Anderson, who teaches metallurgy on the Colorado School of Mines.

“It’s just a nasty, hot soup that’s sometimes acidic,” mentioned Anderson, who just isn’t concerned in Berkshire’s project.

The U.S. Department of Energy grant was centered on the second problem, turning the extracted lithium into lithium hydroxide.

BMW (BMWG.DE) and another automakers favor hydroxide over carbonate as a result of it permits batteries to carry extra energy.

“Batteries should last longer and therefore be more sustainable” with hydroxide, Eric Smith, Berkshire’s vp of lithium improvement, mentioned throughout a July 2021 presentation to Salton Sea-region officers.

But making hydroxide requires additional processing involving crystallizers and different specialised tools. If and when Berkshire is ready to extract the lithium from the Salton Sea brine, making carbonate can be easier and costly than making hydroxide.

The day after Biden touted Berkshire’s project, the corporate privately requested the Energy Department to vary the grant’s scope and let it make carbonate as a substitute of hydroxide, in response to the emails obtained by Reuters by a public data request.

The Energy Department declined, saying that might be a “substantial departure” from the unique proposal and can be unfair to others who utilized for the grant.

Within weeks the grant was rescinded.

Emails present the Energy Department had warned Berkshire in December 2021 – two months earlier than Biden’s minerals roundtable – that talks on grant phrases had reached an “impasse.”

While the White House was conscious negotiations have been ongoing when it hosted Berkshire, it didn’t know concerning the deadlock warning, in response to the administration official.

“We remain optimistic and hopeful that (Berkshire’s) technology pans out and think there’s great opportunity if and when it does,” the official mentioned.

Berkshire’s web site now says it goals to open a lithium carbonate pilot plant subsequent spring.

Berkshire’s choice to not make hydroxide from the Salton Sea – and to forego the federal funding for that – signifies it possible confronted way more advanced technical challenges than it anticipated, 4 analysts instructed Reuters.

“It’s an indication to me that they have some real challenges standing in their path to commercial lithium production,” mentioned Chris Berry, an impartial lithium trade advisor who just isn’t concerned in Berkshire’s project

Privately held Controlled Thermal Resources Ltd and EnergySource Minerals LLC are additionally attempting to extract lithium from Salton Sea brines with totally different DLE know-how for eventual use in EV batteries, however neither are at business manufacturing.

“The magic here is elusive,” mentioned Anderson, the Colorado professor. “It’s not as easy as people portray it to be.”

Reporting by Ernest Scheyder in Houston; extra reporting by Trevor Hunnicutt in Washington; enhancing by Peter Henderson and Claudia Parsons

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