Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Senate panel passes lithium designation change

Pegmatite specimens like this one can contain spodumene crystals—which may host the element lithium. 
Lee Strubinger
Pegmatite specimens like this one can contain spodumene crystals—which may host the element lithium. 

A state Senate panel has passed a bill that declares lithium as a precious metal.

The move subjects the mineral to a state tax. Critics say it doesn’t belong under that designation.

The state does not lob a tax on the extraction of lithium. The number of lithium mining claims in the Black Hills has surged in recent years. However, there are currently no active lithium mines in the state. Industry officials say only one company is exploring for lithium in the Black Hills.

Unlike gold and silver, critics say lithium is not valuable until it is processed or put into a product like batteries. Because of that, they say the mineral does not belong in the state’s precious metals statute.

“Lithium just technically isn’t considered a precious metal,” said Kwinn Neff, with South Dakota Mineral Industries, said. “We will continue to work with Senators on the floor on lithium and its classification under precious metals. Really looking toward a new chapter that addresses these minerals—pegmatites, or industrial minerals.”

Efforts last year to tax lithium as an energy mineral stalled in a Senate taxation committee. This year, a different committee passed the bill, which adds a tax of five percent of net profits to companies that extract the mineral.

Lithium is seen as a crucial mineral to transition the country away from burning fossil fuels for energy. In the Black Hills, lithium is contained in pegmatites, which contain a host of other useful by-products.

Republican Rep. Kirk Chaffee is the prime sponsor of the bill. He said the state may need to look at an entire section of code for regulating pegmatite mining.

“Maybe we need to expand that language to minerals of interest,” Chaffee said. “Those are all topics that I really look forward to talking with mineral industries this summer.”

The House bill to tax lithium now heads to the full Senate. Senate Ag and Natural Resources also approved legislation that increases the bonding requirement for sand and gravel, as well as the kind of rock that can contain lithium.

Lee Strubinger is SDPB’s Rapid City-based news and political reporter. A former reporter for Fort Lupton Press (CO) and Colorado Public Radio, Lee holds a master’s in public affairs reporting from the University of Illinois-Springfield.