At a toxic lake in Calif., enough lithium to transform North America's EV industry

CALIPATRIA, Calif. — From a high spot on Red Hill, the Salton Sea shimmers below in the desert sun and nearby geothermal power plants send plumes of steam into the clear blue sky. Also visible are miles of dried-out shoreline as the waterway evaporates and grows more toxic.

The Salton Sea, a 343-square-mile lake created from Colorado River flooding in 1905, is now known mostly for its fouled waters from agricultural runoff and alarming salt levels. But during its heyday in the 1950s and '60s, it drew millions of visitors and rivaled nearby Palm Springs and Yosemite National Park as a destination.

Now, a new boom is near that could affect the future of North American automaking.

Plans for large-scale lithium mining at the Salton Sea could revolutionize the U.S. electric vehicle supply chain at a time when automakers and policymakers are raising alarms over foreign dependence on battery materials such as lithium.

The lithium — located in vast geothermal deposits and not the water — is so abundant that officials have named the area Lithium Valley and created a commission to steer development. General Motors is investing in a new project there with startup Controlled Thermal Resources.

Before the arrival of the EV revolution, said Rod Colwell, CEO of Controlled Thermal Resources, the Salton Sea's lithium reserves weren't economically viable.

"We knew the lithium was there for the longest time, but the prices weren't there yet to be able to fund it and extract it and to build these plants," Colwell told Automotive News. "This time you can nearly predict the future. All you have to do is look at all the electric cars coming."

According to the U.S. Department of Energy, the Salton Sea region has the potential to supply 600,000 tons of lithium each year, which is greater than current U.S. demand. There is only one large-scale lithium mine currently operating in the U.S., in Nevada.

"This is a great opportunity for the genius of California to be deployed for the very important problem of the electrification of everything," said Danny Kennedy, chief energy officer at New Energy Nexus, a nonprofit group promoting clean power. "If Joe Biden wants to make batteries in America for the electrification of our vehicle fleets, this is your only shot at scale."

A critical advantage for the Salton Sea geothermal area is the use of carbon-free steam to power the mining operation. The lithium is suspended in super-hot liquid, which makes it far easier to get out of the ground than with traditional mining. In fact, the 11 functioning geothermal power plants in the area already take lithium from the ground as they extract brine for steam production. The power producers then return the lithium to the ground along with the spent brine.

Ten of the current plants are operated by a unit of Berkshire Hathaway.

Colwell said the Hell's Kitchen Lithium and Power project, named after a bar and dance hall popular when the Salton Sea was a bustling water attraction, combines a geothermal power plant with a separate lithium extraction facility. The strategy will be rolled out over multiple phases.

"It's basically salty water that comes up at roughly 600 degrees," said Colwell, explaining the process. "We flash off the steam to run the turbine and power the lithium facilities. We use ion exchange to extract lithium chloride and then convert that to lithium hydroxide, which is what our customers are looking for."

The spent brine is returned to the ground.

The startup estimates the project's lithium capacity at 300,000 tons a year once fully built out. The first phase of lithium production is projected for 2024, with 20,000 tons of annual capacity, according to a company report. Future phases would be timed to rising lithium demand.

"What's the world production now? Maybe 380,000 or 400,000 tons. That's it," Colwell said. "We've just got to do little bite-size chunks with 20,000 tons, 20,000 tons, 20,000 tons. And then we just keep replicating the engineering and keep refining as we go. And we just put more wells down and keep moving out."

Most of the lithium to make EV batteries comes from Australia, China and the "lithium triangle" of Bolivia, Chile and Argentina. Lithium spot prices have been sitting above $25,000 a ton in November from below $10,000 in 2015, according to a Reuters report.

The upside of higher lithium prices is that they make U.S. production viable and urgent. The global microchip shortage has ratcheted up concerns over the lack of local supply chains for the EV industry. There are also concerns over the carbon footprint of vehicles that are supposed to lower carbon output.

"If the U.S. electrifies its vehicle fleet with Australian hard-rock mining, putting the rocks on ships to China in order to bake them into batteries, and then ships them across the Pacific to America to make cars here, then it's a carbon problem," Kennedy said.

Most partnerships and investments in Controlled Thermal Resources are led by GM and other automakers that Colwell could not yet name.

In July, GM agreed to a multimillion-dollar strategic investment and commercial collaboration with Controlled Thermal Resources to secure the low-cost lithium from California. Efficient lithium sourcing is crucial for GM as it develops proprietary Ultium batteries with LG Energy Solution and pledges to invest $35 billion in electric and autonomous vehicle development through 2025.

GM plans to deliver 30 new EVs globally by 2025, with two-thirds of them in North America. The project with Controlled Thermal Resources is expected to yield battery-grade lithium by 2024.

"We're going to work on all levels to really have our multiplatform be everything to everybody as fast as we possibly can," said Tim Grewe, GM's director of global battery cell engineering and strategy. "And this is an example of that type of innovation."

GM will work with Controlled Thermal Resources to reduce the cost curve for EVs through continued innovation, he said.

Colwell says Controlled Thermal Resources will likely produce other battery materials from the Salton Sea Geothermal Field, though the company is focused on lithium for now. His team will soon study the commercialization of zinc and manganese.

GM plans to open Ultium cell plants with LG in Lordstown, Ohio, next year, and in Spring Hill, Tenn., in 2023. The automaker has said it will open at least two more Ultium plants in the U.S.

As GM scales Ultium-powered vehicles, a local, high-quality and ethically sourced supply chain becomes crucial, Grewe said.

Salton Sea lithium will not only drive the EV industry, but the taxes and royalties from projects can also fund Salton Sea restoration projects, say local politicians and community groups.

That could potentially include water importation to reduce toxicity and compensate for evaporation.

Potential economic projects are being explored that include battery assembly plants built on the massive dried-out areas around the waterway. That would help control dust that carries toxic materials into the air while bringing jobs to one of the poorest corners of California.

"This could be this amazing scenario where you've got the geothermal power and the lithium, and you've got a willing work force," Kennedy said.

Luis Olmedo, who represents the community group Comite Civico Del Valle on the Lithium Valley Commission, said promises of economic development in the past have benefited a few groups rather than the larger community. He thinks the Lithium Valley project could be different.

"My expectations are really high because all the stars are aligning," Olmedo said. "You have the state and federal administrations driving the agenda to make sure it's a bottom-up approach."

State Asssemblymember Eduardo Garcia, whose district runs from Joshua Tree National Park in the north to the Mexican border, said development of lithium-related projects would help address concerns over EV supply chains, provide jobs in multiple counties and benefit the Salton Sea itself.

"We have an opportunity to really address a handful of issues, including the environmental issue of the Salton Sea," Garcia said. "There is a tremendous amount of potential here, and the question is: How far do we want to go?"

Hannah Lutz contributed to this report.