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Industry warns but California approves lithium tax

Last Thursday (June 30), California approved plans to tax electric vehicles with lithium metal batteries to raise revenue for environmental improvement projects. There was even concern in the industry that this would hurt the industry.

Gov. Gavin Newsom approved the tax as part of the budget the state Legislature signed to collect it.

This tax is structured as a fixed rate per ton and will go into effect in January. The tax will be reviewed each year, and government officials agreed that it could become a percentage tax.

The largest U.S. state sits on a vast lithium reserve in the Salton Sea region east of Los Angles, an area that was severely damaged in the 20th century by years of massive agricultural pesticide use. Revenue from the tax will be used in part to clean up the area.

Federal officials have praised the lithium industry that has sprung up in the area because it uses an environmentally friendly geothermal brine process that differs from open-pit mining and brine evaporation wells, the two most common methods of lithium extraction.

Two of the three lithium companies in the region have warned that the tariffs will worry investors and customers.

Privately held Controlled Thermal Resources Ltd. said the tax would force it to miss deadlines for lithium deliveries to General Motors Co. by 2024 and Stellantis NV by 2025.

EnergySource Minerals LLC, which is also privately held, said it had stopped talks with potential backers and the automaker.

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