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California approves lithium tax despite industry's warnings

Stock Markets Jun 30, 2022 11:05PM ET
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© Reuters. FILE PHOTO: Sunset is reflected in the Salton Sea as seen from Bombay Beach, California, U.S., March 15, 2022. Picture taken March 15, 2022. REUTERS/David Swanson/File Photo

By Ernest Scheyder

(Reuters) - California on Thursday approved a plan to tax the electric vehicle battery metal lithium to generate revenue for environmental remediation projects despite industry concerns that it will harm the sector and delay shipments to automakers.

Governor Gavin Newsom, a Democrat, approved the tax as part of a must-pass state budget on Thursday. The state legislature had signed off on the levy during deliberations on Wednesday night.

The tax is structured as a flat-rate per tonne and will go into effect in January. The tax will be reviewed every year, and state officials have agreed to study potentially switching to a percentage-based tax.

The largest American state sits atop giant lithium reserves in its Salton Sea region, east of Los Angles, an area heavily damaged in the 20th century by years of heavy pesticide use from farming. Funds generated from the tax are earmarked in part to cleanup of the area.

Federal officials have praised the area's start-up lithium industry because it would deploy a geothermal brine process that is more environmentally friendly than open-pit mines and brine evaporation ponds, the two most common existing methods to produce lithium.

Two of the area's three lithium companies warned the tax would scare off investors and customers. Both said they may leave the state for lithium-rich brine deposits in Utah or Arkansas.

Privately-held Controlled Thermal Resources Ltd said the tax would force it to miss deadlines to deliver lithium to General Motors Co (NYSE:GM) by 2024 and Stellantis NV by 2025.

EnergySource Minerals LLC, also privately held, said it halted discussions with potential financiers and an automaker.

"Supporting a tax that ensures lithium imports from China are less expensive for auto manufacturers to secure will devastate this promising Californian industry before it has begun," said Rod Colwell, Controlled Thermal's chief executive.

California approves lithium tax despite industry's warnings
 

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Comments (4)
Randy Hurn
Randy Hurn Jun 30, 2022 11:26PM ET
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"geothermal". so California is fracking .
Todd Gray
Todd Gray Jun 30, 2022 11:17PM ET
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Save the fish roe dredge the human baby roe Newsom giving away the wealth of America,... to the Chinese.
Todd Gray
Todd Gray Jun 30, 2022 11:14PM ET
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there is no time in history where what liberals are doing isn't pulled down by the people. eventually most of those who follow the liberals end up with so little they capitulate in a mass exodus. this will be the third in USA history.
Todd Kacsmar
Todd Kacsmar Jun 30, 2022 11:03PM ET
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More taxes from a democrat utopia So sad
 
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