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XThe Lithium Race Takes Shape in the Salton Sea
David Shultz
David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
Located roughly a hundred miles east of San Diego, the Salton Sea is California’s largest landlocked body of water, for now.
Measuring 5 miles across and 35 miles long in its current form, the lake was created by diverting water from the Colorado River into the region for agricultural purposes. Once a vacation destination renowned for its wildlife and wetlands, a series of environmental mishaps and mismanagement have left the lake toxically salty, shrinking and often malodorous. Conditions have gotten so bad that Palm Springs Life Magazine called the region’s transformation “the biggest environmental disaster in California history” in March of 2020.
But against this unlikely backdrop, new life—or at least new industry—is scrambling to set up shop in the region. The Salton Sea, it turns out, is rich with lithium, an element that has taken center stage in the world’s transition to clean energy and its ever-growing demand for batteries. From smartphones to electric vehicles, there’s a pretty good chance that the last battery you used had lithium ions inside. Prices for the metal reached an all time high in September, and futures are up more than 400% since the start of 2021. With Biden’s new economic policy outlined in the Inflation Reduction Act, there are strong financial incentives to move battery production back to North America.
If that’s going to happen the Salton Sea could very well become the lithium capital of North America, or to paraphrase Governor Gavin Newsom, the region could become the “Saudi Arabia of lithium,” and the players are already starting to assemble.
Currently, there are three companies attempting to set up plants in the Salton Sea for direct lithium extraction: EnergySource Minerals, Controlled Thermal Resources and BHE Renewables, a branch of Berkshire Hathaway. All three companies have similar business strategies from a high level, all of which involve geothermal power plants. These plants, which are common in many parts of the world, draw hot, salty water from deep in the ground to create steam which drives a turbine to produce electricity. What makes the Salton Sea so special is that its geothermal brines just happen to contain lithium.
In a 2017 study, researchers from the U.S. DOE Office of Energy Efficiency and Renewable Energy analyzed more than 2,000 samples of geothermal fluid from U.S. sources and found that only 1% had significant lithium concentration. This rare confluence of geothermal activity and lithium presence provides an opportunity for companies to generate electricity and mine lithium simultaneously.
Beyond their marriage of geothermal energy and lithium extraction, the three companies begin to diverge.
According to former dot.LA engagement editor Luis Gomez — whose newsletter Lithium Valle, is essential reading on this topic — EnergySource seems to be out in front early.
“They claim to have the technology that’s patented, they claim to have done the research, they claim to have the funding, and they claim they're ready to go and start production,” says Gomez. “They are kind of considered the canary in the coal mine.”
According to a report from the United States Department of Energy, EnergySource plans to eventually scale production up to over 20,000 metric tons of lithium hydroxide per year using its proprietary Integrated Lithium Adsorption Desorption technology.
Construction on the plant was slated to start earlier this year, but has been delayed. EnergySource has said publicly that lithium production might begin in the second quarter of 2024, but it’s unclear whether this date will also be pushed back. The company has a long history of operating in the region, having run the John L. Featherstone geothermal plant since 2012. The new venture into lithium would leverage that same plant, but without more details about how their proprietary technology works, there’s not much to do but wait and see.
One potential problem facing all three lithium extraction companies is that the Salton Sea geothermal brines are not the same as the brines in evaporation ponds similar to those in Argentina, Chile and Bolivia, where more than half of the world’s lithium is produced. Specifically, the deep geothermal brines in the Salton Sea contain more silica and transition elements, which may complicate the chemistry of purifying the lithium. Still, many researchers are extremely bullish on the prospect of tapping into these reserves. Alex Grant, The Principal at Jade Cove, a research organization focusing on direct lithium extraction technologies, says that much of the skepticism surrounding the technology can be attributed to competing financial interests that are trying to squash the nascent tech’s potential in favor of an established method.
Lithium Mines in the Atacama Salt Flats, Chile from an altitude of 15km via Google Earth. The facility is about 10km wide.
Google Earth
For its part, BHE Renewables, operating as CalEnergy, runs a fleet of 10 geothermal plants in the Imperial Valley. The company had previously announced its intent to set up a direct lithium extraction demonstration plant sometime before the end of 2022 to assess the viability of lithium extraction. If that pilot program goes well, the company could build a commercial-scale facility as early as 2026 with a projected annual capacity of 90,000 metric tons of lithium.
Obviously, having the backing of Berkshire Hathaway comes with advantages and capital. Add into the equation another $15 million in DoE grant money obtained last winter, and BHE appears to be well positioned as a major player in the long term.
Finally, there’s Controlled Thermal Resources. As the only company not already operating a geothermal business in the region, CTR is something of an outsider and dark horse. By 2024, the company hopes to build both a geothermal energy plant and a direct lithium extraction plant to operate in parallel, projecting a capacity to extract 300,000 metric tons of lithium carbonate equivalent annually by 2030. As dot.LA previously reported, Controlled Thermal Resources has partnered with Statevolt, a company that intends to build a $4 billion gigafactory nearby that will run on power from CTR’s geothermal plant and make batteries from the lithium it extracts. It’s a beautiful closed-loop business model. But again, all of this relies on the direct lithium extraction technology, and details are scant.
According to Gomez, despite the typically cut-throat nature of the energy industry, the relationship between the three upstarts in the Salton Sea is often surprisingly cooperative at the moment.
“They want the others to succeed because it kind of gives them the confidence that their technology is also eventually going to succeed,” he says. “It gives confidence to investors.”
Which is all to say, there may well be space for all three companies if the technology is as solid as they claim. If that’s the case, the Salton Sea and its surrounding region may have yet another miraculous transformation up its sleeve.
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David Shultz
David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
LA Tech Week: Technology and Storytelling for Social Good
09:29 AM | June 06, 2023
Photo taken by Decerry Donato
On Monday, Los Angeles-based philanthropic organization Goldhirsh Foundation hosted the Technology and Storytelling For Social Good panel at Creative Visions studio to kick off LA Tech week.
Tara Roth, president of the foundation, moderated the panel and gathered nonprofit and tech leaders including Paul Lanctot, web developer of The Debt Collective; Alexis Cabrera, executive director of 9 Dots; Sabra Williams, co-founder of Creative Acts; and Laura Gonzalez, senior program manager of Los Angeles Cleantech Incubator (LACI).
Each of the panelists are grantees of Goldhirsh Foundation’s LA2050, an initiative launched in 2011 that is continuously trying to drive and track progress toward a shared vision for the future of Los Angeles. Goldhirsh’s vision is to make Los Angeles better for all and in order to achieve their goal, the foundation makes investments into organizations, creates partnerships and utilizes social capital through community events.
The panelists shared how the work they are doing in each of their respective sectors uses technology to solve some of society's most pressing challenges and highlight the importance of tech literacy across every community.
Using technology to solve societal challenges
The Debt Collective, a debtors’ union, helps people find easier ways to get their debts forgiven, specifically students who may find it difficult to navigate the often complicated process.
“ [The court system] is a very archaic process,” said web developer Paul Lanctot. “People with doctorate degrees would struggle to fill out some of these papers.”
By using its online toolkit platform, the company has made the process simpler, giving tenants facing eviction a chance to “update their rights and assert their defenses.” The Debt Collective has collaborated with The LA Tenants Union and The Anti-Eviction Mapping Project to develop The Tenant Power Toolkit, which “allows tenants facing eviction to fill out simple yes and no questions about their situation, the eviction they're facing and it will generate the court documents for you without you having to go through that complicated process,” he said.
If you're in L.A. County, the toolkit can electronically file the documents for you. “The next step for you is just to wait to receive a mail notice of when your court date is,” Lanctot said.
Alexis Cabrera, executive director of 9 Dots, echoed Lanctot’s thoughts on the societal impact of technology. Since 2011, the South Pasadena-based nonprofit organization has dedicated itself to providing computer science education to underserved communities in Los Angeles.
“We believe that everybody can and should learn how to code,” Cabrera said. “I don't really have to tell this room but you know, technology is everywhere in our lives today.”
As millions of jobs around the world face the risk of being replaced by generative AI, Cabrera believes that an education in computer science is necessary to prepare children for the future.
“So we're doing the work to bring kids into the computer science education pipeline from a really early age while identities are being formed and before these youths are opting out of STEM or pushed out of STEM,” Cabrera said.
Creating equity through tech literacy and access
Sabra Williams, a firm believer in the right to technological access, co-founded Los Angeles-based nonprofit Creative Acts to transform urgent social justice issues through art and technology, especially by giving voice to those who are or have been incarcerated.
Through a partnership with Meta, the nonprofit has access to 20 Oculus headsets which are loaded with content from travel experiences to daily activities like pumping gas or going to a grocery store. This program aims to help incarcerated people prepare for life outside of prison.
“We got very tired of people coming home after 20 to 30 years inside and not being able to operate in a fully computerized world versus those of us on the outside who had a gradual ramp up to full computerization,” Williams said. “Without the internet, it's sometimes very difficult when you're trying to have people who are in a metal cage wearing headsets all together in a very small room, but we're doing it.”
Lanctot said he is involved with The Debt Collective for similar reasons: because he believes every student and renter should be informed about their rights.
“Even though we've made this toolkit and it’s really simple, it's still very difficult for a lot of people to fill out and a lot of people call our hotline. A lot of people need step by step support to fill out some of the questions,” he said.
While their toolkit is currently only available in English and Spanish, the team aims to soon translate their materials to 14 languages to become more accessible to tenants with less resources.
Diversity brings innovation
For Laura Gonzalez, senior program manager at LACI, it is important to have a wide range of diversity among founders within the tech ecosystem.
“We see the gender gap, the income gap in financial services,” Gonzalez said. “So, we needed a way to help entrepreneurs that come from historically marginalized communities, to help them level up a bit.”
LACI does this by giving women entrepreneurs and entrepreneurs of color access to business resources like its Innovations & Incubation programs that help startups develop their technologies, secure funding, and receive financing as well as coaching by experienced mentors. “It is really transformative because the coaches that we have are mentors who are really good at scaling and building businesses,” she said.
Cabrera agreed and added that in order to close the gaps in equity, young people need to play a more active part in the future of technology.
“We'd like to see more kids really be the creators of these technologies instead of just the consumers,” Cabrera said. “When we get more folks with lived experiences in the decision-making room, this is what happens and these are the kind of beautiful solutions that we see.”
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Decerry Donato
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Why Neobanks Are Having Such a Difficult Time Making Money
10:28 AM | May 16, 2023
Courtesy of Dave
Santa Monica-based financial technology company Dave is cutting its net losses, but the newly-public company has a ways to go before it’s profitable – a struggle that many “neobanks,” are facing.
In its recent first quarter earnings, Dave reported revenue of $58.9 million, against a net loss of $14 million. Though Dave has been steadily cutting its net loss over the last year in consecutive quarters, it’s still not profitable.
Dave’s core feature is ExtraCash, a program that allows users to receive up to $500 of their upcoming paycheck in advance, in exchange for a monthly $1 membership fee. Dave makes income from some other fees, like an additional $5.99 for advances over $100, and a $1.99 fee for express cash delivery.
These interest-free short-term loans led the app to surpass 1 million Dave Banking customers in 2020. In total, Dave now has 8.7 million members, the company said. American households are under increasing financial pressure, and that’s leading to an uptick in people looking for neobank services like fee-free banking and paycheck advances.
And people are increasingly relying on Dave’s advances to get by. In its first quarter earnings Dave reported its quarterly count of members increased 34% to 2 million, and the number of transactions those members made went up 19% compared to the same time a year prior. Some reviewers have noted they find the app helpful in times of emergency, or when they need a lift after a tough bill paying cycle.
“Dave was profitable in 2018 and 2019 and we’re confident we’ll get there again in 2024,” CEO Jason Wilk told dot.LA. “We made a deliberate investment in headcount over the last few years to grow our technology teams, and we know that was the right strategic decision for Dave.”
Neobanks directly capitalize off the unbanked (people who’ve never had a checking or savings account before), which is millions of Americans, especially people of color: According to the FDIC, roughly 5.9 million households were unbanked in 2021. The main reasons unbanked people gave for not having accounts were because they didn’t meet minimum balance requirements, and also, they just don’t trust banks.
“The consumers Dave serves are already struggling with a lack of credit and affordable banking options; they need a modern banking solution that works hard for them and addresses their specific needs,” Wilk said.
But while there are plenty of startups like Dave disrupting the financial sector, and there’s a clear need for the services and transparency they provide, the vast majority of neobanks are having a hard time making money: The same report found that less than 5% of these banks were breaking even.
“Even after adjusting for the high acquisition costs, the large majority of Neobanks still haven’t found the key to making money,” Simon Kucher & Partners’ Christoph Stegmeier and Matthias Verburg wrote in the report.
Private neobanks or digital payday lending services like Earnin or Brigit should be laser-focused on becoming sustainable even if investors pull back funding, according to David Stolpe, managing director of Wells Fargo’s Southern California Tech Banking division. Across the board, a decline in deal flow and exits so far this year has led to VCs being more cautious about deploying cash to startups in need of growth funding, and the fintech industry is no exception.
Another hindrance to any neobank’s growth is regulations, Stolpe said. He thinks neobanks are struggling a bit because “they need to lean on established rails within a highly-regulated industry, for them to be as effective as they can possibly be. It's really hard for a company like Dave or others in that space to be a fully functional replacement for a bank.”
Plenty of neobanks forge partnerships with smaller regional banks to hold deposits and provide features they cannot, Stolpe said, noting many debit card services offered by neobanks “are essentially a white-label off of another bank’s program.” In Dave’s case, its deposits are held by Tennessee-based Evolve Bank & Trust, which also issues the Dave debit cards.
But Stolpe added that companies like Dave and others are “not going to be a full bank until they have the capabilities to actually provide all those banking services that other chartered and regulated institutions can provide… that’s something that those [neobanks] have to build out.”
In particular, Stegmeier and Verburg recommended these fintech startups embrace buy now, pay later financing tools like those offered by Klarna or Sezzle, since it’s a form of credit that’s hot right now. They also encouraged neobanks to offer more options for financing real estate, or offer investing tools including automated portfolio management, like SoFi and Acorns do.
Stolpe noted that these neobanks like Dave “have to figure out the right way to charge for their product, whether it's interest on loans, or how much interest you're paying on deposits, or what their subscription on a monthly basis is… they've got to figure out a way to make that model work from a profitability perspective.”
Editor's Note: This story has been updated with comment from Dave CEO Jason Wilk.
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Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
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