Tesla is in talks to buy lithium from Warren Buffett’s geothermal wells in California, report says (Updated)

Warren Buffett’s Berkshire Hathaway Energy is looking to potentially extract large amounts of lithium from its Salton Sea geothermal plants and Tesla is reportedly in talks to be a customer.

Updated: 7:00am ET Berkshire has denied that any agreement is in place but left open the possibility that talks could be underway. 

“There is no agreement in place with anybody to allow extraction of lithium or any other minerals from the geothermal wells in California,” Jessi Strawn, a spokeswoman for Berkshire Hathaway Energy Co, which is majority-owned by Warren Buffett’s conglomerate, said in an emailed response to a Reuters query.

Those who have been following Tesla for a long time will remember that the automaker tried and failed to buy a lithium startup in the Salton Sea for $325 million back in 2014.

Now they could be again looking to use lithium from area to supply Gigafactory 1 in Nevada.

Financial Times (paywall) reported that Berkshire Hathaway Energy is in talks with Salton Sea Industries over an agreement to extract lithium from its brines.

Tesla is reportedly interested in the lithium:

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

The automaker has always said that it aims to get raw materials for battery production at Gigafactory 1 from more local sources.

There are lithium reserves fairly close to the factory in Nevada, but only one is currently in production and many other exploitation projects are lagging behind.

Warren Buffett’s geothermal wells in California could produce up to 90,000 tonnes of lithium a year, according to fundraising documents.

At current prices, the value of the lithium would be worth about 5 times the power that the wells are generating.

That said, it’s not a done deal since an estimated $2.5 billion investment would be required in order to extract that much lithium from the project.

Electrek’s Take

I’m intrigued. That would be the second time that Tesla tries to get lithium from Salton Sea geothermal brines.

It fell apart the first time after Tesla and the company developing the technology to extract the resource couldn’t agree on a price. The startup ended up going under.

But now it could be a different story with Tesla being in a completely different position than it was back in 2014 and the deep pockets of Warren Buffett’s Berkshire Hathaway also being involved.

A deal with a large customer, like Tesla who is now the largest battery consumer in the world, could help the project move forward.

It’s an interesting story that we are going to have to follow.