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ENERGY - In the southeast corner of California, in an area near the Mexico border, a project known as the Lithium Valley has been quietly moving forward over the past few years. The project holds promise of building a new economic base for this largely agricultural county, Imperial County, one of the poorest of the 58 counties in the state. Whether the project will be achieved, though, is still in the balance, with the upcoming year a pivotal one.
The California economic development landscape over the past four decades is filled with major economic development plans that failed to produce results: plans in the 1980s to rebuild California’s heavy manufacturing base, in the 1990s to rebuild the decimated timber economies of the state’s North Coast, in the early 2000s to retrain laid off oil and gas workers. In the past decade, state planners heralded jobs in alternative energy and then in cannabis, but neither industry has produced near the anticipated number of jobs.
Lithium Valley, however, has a different feel from these other projects. It is not only that the project has as its foundation a highly valued natural resource, lithium, and advanced extraction techniques—though these are primary factors. The project is being driven by local appointed and elected officials who are from Imperial County, know the territory, and are grounded, with none of the sense of entitlement and the ideologies that now prevail in the state’s major cities. They recognize the project challenges: financing, environmental, and its own jobs perplex: how to tie the jobs generated to the County’s current residents and struggling small businesses, and how to leverage Lithium Valley to build a diversified private sector economy.
Let’s first say a word about the current state of the project, before turning to its job perplexes in 2024.
The Project: Lithium Extraction and Local Battery Manufacturing
The project has two main components. The first is the extraction of the enormous deposits of lithium, estimated to be up to 18 million tons of lithium, located on the banks of the Salton Sea in Imperial County. A U.S. Department of Energy analysis, released last week, estimated that the Salton Sea’s resources could produce enough lithium to support all of the lithium demand in the United States in upcoming years—and up to 30% of the world demand. Lithium is a key element in a range of products, most notably battery production in cell phones, home electric devices, and electric cars (the DOE estimates the lithium in the Salton Sea area could be sufficient to support 375 million electric car batteries). The United States currently relies on imports for nearly all of its lithium needs.
Three companies are now moving forward to mine the lithium: Berkshire Hathaway Renewables (BHR), Controlled Thermal Resources (CTR) and Energy Source Minerals. CTR is the most advanced in the process, with small extraction efforts already underway, and an announcement earlier this year of a $100 million investment from automaker Stellantis. Energy Source Minerals, which already operates a geothermal plant on the Salton Sea, announced early this year a contract with Ford Motor Company for lithium supply. More recently, it has released plans to start construction in 2024 on a $1 billion extraction and processing plant, operational in 2025. BHR, well-established in the area and operating 10 geothermal plants, is also testing extraction processes, with the goal of starting construction on its commercial scale lithium extraction plant in 2024.
The extraction process is not without its challenges from environmental groups and local community groups. Environmental groups are raising questions concerning the excavation impacts on the water supply and air quality in the area. Local community groups are questioning what benefits local residents will see from these projects.
The project’s second main component is the siting in Imperial County of battery manufacturing plants that will utilize the lithium. The challenges here currently lie in persuading major battery manufacturing firms to locate in the County, and tie into the extraction plants. It is the battery manufacturing that offers the larger number of jobs, compared to extraction. The extraction process, among the three plants in development, is projected to generate 500-700 jobs, when fully in operation. In comparison, the battery plants under discussion are projected to generate up to 2000 jobs each. In April 2022, the battery company Statevolt announced plans to construct and invest $4 billion in a gigafactory that would start to produce batteries in 2025—ramping up to battery production for over 650,000 cars by 2028. Statevolt, though, continues to seek financing for the factory. Imperial County officials are speaking with other battery manufacturing companies across the world that have expressed interest, but none has yet committed.
So as 2024 dawns, questions hang over both extraction and manufacturing, on moving both forward and to what extent they can impact the broader County employment and small business network.
One of the geothermal plants now in operation in the Salton Sea area.
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In achieving Lithium Valley, there is much outside the control of Imperial County officials: the price of lithium on the world market, the volume of extraction elsewhere, even America’s trade relations with China. China currently buys 70% of the world’s lithium compounds and supplies over 70% of lithium production.
But at least among those elements within the control of the County, the appointed and elected officials are proceeding with awareness of the employment challenges, and sensible and balanced approaches. As noted above, California has a history of failed economic development schemes, revealing the difficulties of large-scale job creation, so that Kelley, Lopez and Figueroa know that going into 2024, they can take nothing for granted.
(Michael Bernick is the former director of the California Department of Labor. The views expressed in this article are the writers' own and not those of CItyWatchLA.com.)
