In a February meeting with mining executives, President Joe Biden outlined an aggressive goal for the United States to produce more of its own minerals for the electric vehicle revolution in ways that conserved the environment.
A “big part” of those efforts, the president said, was a plan by Warren Buffett’s Berkshire Hathaway Inc to extract lithium from superhot geothermal brines swirling beneath California’s Salton Sea, something that was to be done for the first time.
This project sought to help launch a new way of producing lithium – a major constituent of EV batteries – in the United States while preventing the controversies that come with building mines that are usually disliked by local community.
The U.S. Department of Energy had chosen Berkshire the day Biden was sworn into office in January last year for a $14.9 million grant to research how Salton Sea-region lithium could be used to produce lithium hydroxide, a specialized type of the metal that makes more efficient 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 said at the February event, which was billed as a vital minerals roundtable.
Alicia Knapp, chief executive of Berkshire’s BHE Renewables division, told 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, though, the Energy Department revoked the grant, according to documents and emails acquired by Reuters, after Berkshire asked for what the Energy Department called a “material change” to its lithium project. The withdrawal of the grant has not been previously announced.
While the sum of money was relatively insignificant for the mining world and the Salton Sea grant was for a pilot project, the tale of Berkshire’s tangle with Washington indicates how Biden’s plan to shift the economy away from fossil fuels is confronted by some major business and technical challenges.
Thirteen months of talks between the government and the company, which Reuters is reporting for the first time, stopped as Berkshire sought control over patents, technology changes, and whether it could one day dispose of the lithium business, even after the government helped develop it, the documents and emails show.
Asked about the grant withdrawal, a Biden administration official said there are “inherent risks” in backing research and development projects, and noted that various companies including Berkshire are still developing U.S. lithium projects.
The Energy Department’s March 9, 2022, letter informing Berkshire it was revoking the grant said the move was “the result of a mutual decision” and would not hinder Berkshire from seeking future federal funding.
Berkshire, however, is experiencing problems filtering lithium from Salton Sea geothermal brines, according to three sources close to the operation who refused to be named so as not to damage future relationships with the company.
In a statement to Reuters, Berkshire said it had intended to build “a first-of-its-kind demonstration plant to produce lithium hydroxide” but “subsequently decided to use a commercially proven process” to make lithium carbonate instead.
“This change in technology increases the likelihood of success and accelerates the speed to market,” Berkshire spokesperson Dan Winters said. The company refused to comment on other parts of this story.
‘Nasty, Hot Soup’
Berkshire runs many power plants near the Salton Sea, around 160 miles (258 km) southeast of Los Angeles, where it flashes steam off brines taken from deep underground at temperatures around 700°F (371°C) to rotate turbines that generate electricity.
In theory, Berkshire’s plan was practical. Technology for an extra processing step could be hooked up to one of the existing plants to extract lithium before the brine is reinfused underground. That would prevent the need for large evaporation ponds or open-pit mines, the two most common but environmentally challenging ways to extract lithium.
From the beginning, Berkshire’s challenge was twofold. First, it required to filter lithium from that hot brine using a commercially unverified class of technology known as Direct Lithium Extraction, or DLE. Then it planned to build new technology to process that lithium into lithium hydroxide.
For the first challenge, the California Energy Commission awarded Berkshire a $6 million grant in May 2020. As part of its deal with the state, Berkshire said it would use DLE technology from a different company, AquaMin Lithium and Water Recovery Inc.
But clogged pipes and corroded equipment from the superhot brine are plaguing the extraction operation, according to the three sources familiar with the matter. “I think Berkshire has an unsolvable problem,” said one source, who gave remarks about the facility struggling to obtain even the most basic processing equipment to work because of the extreme heat of the geothermal brines.
AquaMin, a division of privately held Conductive Energy Inc, failed to respond to requests for comment. The California Energy Commission (CEC) said its funding for Berkshire was not impacted by the withdrawal of the Energy Department grant.
The region’s brine is filled with lithium, sodium, calcium, and other minerals that are very difficult to separate, said Corby Anderson, who teaches metallurgy at the Colorado School of Mines.
“It’s just a nasty, hot soup that’s sometimes acidic,” said Anderson, who is not involved in Berkshire’s project.
The U.S. Department of Energy grant was to address the second challenge, convert the extracted lithium into lithium hydroxide.
BMW (BMWG.DE) and some other automakers opt for hydroxide over carbonate because it enables batteries to retain more power.
“Batteries should last longer and therefore be more sustainable” with hydroxide, Eric Smith, Berkshire’s vice president of lithium development, said during a July 2021 presentation to Salton Sea-region officials.
But producing hydroxide requires extra processing entailing crystallizers and other specialized equipment. If and when Berkshire is able to separate the lithium from the Salton Sea brine, producing carbonate would be less difficult and costly compared to producing hydroxide.
The day after Biden announced Berkshire’s project, the company secretly asked the Energy Department to change the grant’s scope and let it produce carbonate instead of hydroxide, according to the emails acquired by Reuters through a public records request.
The Energy Department refused, saying that would be a “substantial departure” from the original proposal and would be unfair to others who sought to obtain the grant.
Within weeks the grant was revoked. Emails confirmed the Energy Department had cautioned Berkshire in December 2021 – two months before Biden’s minerals roundtable – that negotiations on grant terms had reached an “impasse.”
While the White House was aware talks were in progress when it hosted Berkshire, it was not aware of the impasse warning, according to the administration official.
Buy Crypto NowThe official said:
“We remain optimistic and hopeful that (Berkshire’s) technology pans out and think there’s a great opportunity if and when it does.”
Berkshire’s website currently says it plans to start a lithium carbonate pilot plant next spring. Berkshire’s decision not to produce hydroxide from the Salton Sea – and to decline the federal funding for that – suggests it likely encountered far more complex technical challenges than it anticipated, four analysts told reporters.
“It’s an indication to me that they have some real challenges standing in their path to commercial lithium production,” said Chris Berry, an independent lithium industry consultant who is not involved in Berkshire’s project.
Privately held EnergySource Minerals LLC and Controlled Thermal Resources Ltd are also attempting to separate lithium from Salton Sea brines with different DLE technology for eventual use in EV batteries, but neither are at commercial production.
“The magic here is elusive,” said Anderson, the Colorado professor. “It’s not as easy as people portray it to be.”