Press "Enter" to skip to content

HB 1072: Senate Taxation Kills Lithium Tax on Shaky Premise That Current Severance Taxes Can’t Cover Lithium

California can figure out how to tax lithium mining, but South Dakota can’t.

Representative Kirk Chaffee (R-29/Whitewood) proposed House Bill 1072 to subject lithium to South Dakota’s severance tax. In its original form, HB 1072 would simply have added lithium and pegmatite (a frequently lithium-bearing ore) to the list of energy minerals on which we impose a severance tax of 4.5% based on their sale price or market value. Deeming lithium an energy mineral would also subject it to a conservation tax of 0.24% of its taxable value.

Chaffee originally proposed that the state split the money with the county in which the lithium would be mined, extractied, or produced, 80% for the county, 20% for the state. That’s a better deal for the counties than the 50-50 split with the state currently applied to all other energy mineral severance tax. The conservation tax on lithium would all go to the state’s environment and natural resources fund, as do all current conservation taxes. House Taxation removed pegmatite from the bill. The full House booted the 20–80 split, defaulting to the 50–50 split used for other energy minerals and reducing the counties’ potential take. The House also specified that the conservation tax from lithium be used for reclaiming mined land.

Senate Taxation killed the lithium severance tax on Friday, heeding warnings from the Department of Revenue and the mining industry that HB 1072 wasn’t ready:

The Senate Taxation Committee voted 4-2 on Friday to kill the legislation, after hearing from state Department of Revenue official Jason Evans that HB 1072 was incomplete, even after several rounds of amendments, and that there’s time to work on a new version for next year.

Also testifying against it was South Dakota Mineral Industries Association president Kwinn Neff [Bob Mercer, “Severance Tax on Lithium in South Dakota Is Now Dead,” KELO-TV, 2023.02.03].


Opponents of the bill included the state Department of Revenue. They say the bill did not properly address how to tax the substance and determine its value [staff, “Bill Taxing Lithium Mining Fails in Committee,” SDPB, 2023.02.03].

Hmm… current law seems to properly address how to determine the value of the other substances we extract from the Black Hills and other locales and tax them. How does simply adding lithium to those same laws not properly address the valuation and taxation of lithium?

California just enacted a tax on lithium mining last month. California applies a progressive tax based on a producer’s cumulative mined amounts per year: $400 per metric ton for the first 20,000 tons extracted, $600 per metric ton on the next 10,000 tons, and $800 per ton for every ton extracted beyond 30,000 tons. The state keeps 20% of the tax for Salton Sea restoration projects and gives the other 80% to the counties, with the specification that Imperial County distribute at least 30% of the lithium tax it receives to communities most affected by lithium mining. The business lobby warned that taxing lithium would hamstring their operations, but there’s no sign the lithium tax is slowing down lithium development in California.

If HB 1072 is somehow incomplete, Senate Taxation could have used California’s operational lithium severance tax as a template for filling any perceived policy gaps. Instead, I get the impression certain Republicans just wanted an excuse to allow some business friends to jump into a new mining field and maximize their profits without having to pay any pesky taxes to promote the general welfare.


  1. larry kurtz 2023-02-05 11:50

    Ores containing lithium are hideously carbon intensive to mine and the General Mining Law of 1872 allows foreign companies to exploit public lands instead of sharing the pecuniary rewards with landowners. But some decommissioned coal fired power plants are being remediated in part by harvesting needed minerals from coal waste.

    In my home state of South Dakota, British Columbia-based United Lithium has staked some 500 claims, some on Bureau of Land Management ground near Pringle, where lithium bearing pegmatites are already being quarried for potassium feldspars and micas.

  2. grudznick 2023-02-05 13:09

    grudznick’s close personal friend Lar points out the hypocrisy of the carbon deficit required to mine the rocks for batteries for electric cars. grudznick laughing. grudznick laughing.

  3. Jake 2023-02-05 14:19

    Laugh your ass off grudz, as will most others of you ilk at any progressive attempts to do somethng about climate change!

    This bill by Chaffee had it ‘right on’ with the 80/20 % split of taxes. The counties suffer the most harm from mining (roads etc.) and deserve a better share of the pie. Plus, these monies to state then go to supplement air travel by a governess bent on being a lusting national politician.
    Let’s hope that summer study gets it right. The 1872 Mining Act is sorely bent toward the needs of finding and extracting ores, not updated SINCE 1872–a mighty long time with no corrective action. Allowing foreign companies (mmm-maybe owned by China?!) to own the rights to our national resources….. a national issue our 3 reps could work on I know, but I thank Chaffee for bringing it.

    Grudz- methinks your problem is that you have ” ‘phantom diarrhea’ ” from all the goat gravy you claim to eat. (perhaps not ‘phantom’!)

  4. larry kurtz 2023-02-05 15:27

    a weirdo like bob is a treasure
    his wit is splendid beyond measure
    my blunt is a stump
    marty’s career goes per-phlump
    powers’ belly-flops bring me great pleasure….

  5. Mark Anderson 2023-02-05 15:33

    The grudz of the world would have the cities still filled with horse manure.

  6. Mark Anderson 2023-02-05 15:36

    I tried 7 times to write horseshxt, so I had to go with manure.

  7. grudznick 2023-02-05 18:03

    Mr. Jake’s “phantom diarrhea” sounds nearly tantric. For you younger fellows who can withstand that sort of thing.

  8. DaveFN 2023-02-05 21:40

    Talk about phantom:

    “The forest carbon offsets approved by the world’s leading certifier and used by Disney, Shell, Gucci and other big corporations are largely worthless and could make global heating worse, according to a new investigation.

    The research into Verra, the world’s leading carbon standard for the rapidly growing $2bn (£1.6bn) voluntary offsets market, has found that, based on analysis of a significant percentage of the projects, more than 90% of their rainforest offset credits – among the most commonly used by companies – are likely to be “phantom credits” and do not represent genuine carbon reductions.

    The analysis raises questions over the credits bought by a number of internationally renowned companies – some of them have labelled their products “carbon neutral”, or have told their consumers they can fly, buy new clothes or eat certain foods without making the climate crisis worse.

    But doubts have been raised repeatedly over whether they are really effective.

    The nine-month investigation has been undertaken by the Guardian, the German weekly Die Zeit and SourceMaterial, a non-profit investigative journalism organisation. It is based on new analysis of scientific studies of Verra’s rainforest schemes.

    It has also drawn on dozens of interviews and on-the-ground reporting with scientists, industry insiders and Indigenous communities. The findings – which have been strongly disputed by Verra – are likely to pose serious questions for companies that are depending on offsets as part of their net zero strategies.”

    The Carbon Con

    Our analysis of nearly 100 million carbon credits found that only a fraction of them resulted in real emissions reductions. It raises questions for the organisations that many of the world’s biggest companies, and the consumers who buy their products, rely on to set the standard for effective carbon offsetting—in particular the biggest of them, Verra.

    “The implications of this analysis are huge,” said Barbara Haya, head of the Carbon Trading Project at the University of California, Berkeley. “Companies are making false claims and then they’re convincing customers that they can fly guilt-free or buy carbon-neutral products when they aren’t in any way carbon-neutral.”

  9. Arlo Blundt 2023-02-05 22:02

    M4. Chaffee seems to be on the right track…hopefully we can get some envoronmental input and influence into this proposal and bring it back.

  10. All Mammal 2023-02-06 14:07

    DaveFN- your comment is the first time I have heard it referred to as ‘global heating’. It is much more urgent. I like it. Well, I actually hate it, but , ya know what I mean.

Comments are closed.