Berkshire Hathaway’s geothermal wells could produce up to 90,000 tonnes a year

Buffett’s lithium venture promises secure supply for US carmakers

Warren Buffett’s Berkshire Hathaway has made a move into lithium, signing an agreement to allow extraction of the battery mineral from its geothermal wells in California.

The venture hopes to produce up to 90,000 tonnes of lithium carbonate a year from Berkshire’s Salton Sea geothermal plants, worth $1.5bn at current prices, according to a fundraising document.

It has been in discussions to supply Tesla with lithium, a component for batteries to power electric cars, said people familiar with the company.

If successful, the project could offer US carmakers and battery producers a secure supply of the metal, reducing reliance on the handful of large producers in Chile and Australia. The only current US supply comes from the Silver Peak mine in Nevada, run by Albemarle.

“We see a lot of interest in getting North American supply as automakers start to get further into electric vehicles,” said Eric Besseling, a vicepresident at BHE Renewables, a unit of Berkshire Hathaway Energy.

He declined to comment on any agreement with Salton Sea Industries.

The Salton Sea geothermal plants have “the potential to become one of the world’s largest lithium resources rivalling the Lithium Triangle in Chile and Argentina,” according to a fundraising term sheet seen by the Financial Times.

Tesla has shown interest in the potential of the Salton Sea before. In 2014 the carmaker run by Elon Musk made a $325m bid to acquire Simbol Materials, a company that was looking at extracting lithium from the area’s geothermal plants, but that offer was turned down by the company.

Lithium prices have fallen by 17 per cent over the past year, as new supply from mines in Australia has entered the market.

But analysts expect demand for lithium to more than double by 2025 as electric cars become more affordable.

“The technology risk is apparent but the upside should this work and disrupt the lithium industry’s traditional production base and timelines in getting new supply into the EV battery space is too great not to explore,” said Simon Moores, managing director at Benchmark Mineral Intelligence in London.

Berkshire Hathaway Energy has licensed the right to extract lithium from its 10 geothermal facilities in the Salton Sea to a newly formed company, Salton Sea Industries, which is initially looking to raise $20m in a private placement. The project will eventually cost $2.5bn, the company estimates.

Mr Besseling said initial projections show that, if the technology works, the cost of production could be as cheap as the lithium produced in Chile — currently among the lowestcost production in the world.