10 ms·

Tesla offered $325M for Salton Sea startup

149 points by galori 10y ago

jrcii 10y ago
As someone who grew up in Palm Springs I can't believe there was a startup there. There is absolutely nothing going on there. Maybe it's changed in the last 10 years.
galori 10y ago
Apparently lithium gets mined. Who knew.
garyclarke27 10y ago
Tesla should buy the Jadar mine in Serbia, huge deposits of Lithium, Rio Tinto seem to have done nothing with it! Serbia could do with some positive investment, economy is still dire, lovely people who deserve a break.
- dogma1138 10y ago
  The amount of lithium in LiOn batteries is actually very small a common chemistry 18650 has between 0.3 and 0.7 grams of lithium per battery.
  - SFJulie 10y ago
    The cumulative price of Li may be small, but since once used its recycling cost is higher than its extraction cost, then as a result, the price can only grow up (except when like with oil there is strong manipulation of the market by the banks). The beauty of a world which resources are finite is that cheap resources always finish to disappear.
  - Reason077 10y ago
    More than 7000 of those cells go into a Tesla battery pack. That adds up to several kilograms of Li per vehicle!
    - dogma1138 10y ago
      Yes but you use more manganese or cobalt or w/e based on the chemistry of your battery than Lithium. Oddly enough if Tesla is going to buy mines for batteries Lithium most likely is not going to be their first buy. I don't know exactly what chemistry Tesla is going to end up using but if it's LCO/NMC which is 60%/20% cobalt they probably want to find a source of cobalt before lithium. If they are going to sploosh on super fancy NCA batteries (unlikely since they only do about 500 cycles, LCO and NMC are the most likely chem for EV's) which are only 9% cobalt that still probably makes sense since the world production of cobalt is about 10 times smaller than the production of Lithium.
      - PCMcGee 10y ago
        Musk mentioned nearly the exact percentages of metals used in the last Tesla shareholders meeting recently.
        dogma1138 10y ago
        Do what are they? I couldn't easily find out, I've seen various sources quoting NMC and some indicating that they are switching to NCA.
    - imaginenore 10y ago
      7000 * (0.3 to 0.7) = 2.1 to 4.9 kg per car. At 400K preorders they will need 840 to 1960 metric tons of Li. Australia alone produces 13400 metric tons per year, Chile another 12900.
michaelbuckbee 10y ago
The facts are still a bit scarce, I wonder if their claims of a more efficient extraction process failed to scale up.
PaulRobinson 10y ago
1. Buy mine in Serbia 2. Invest hundreds of millions in mine 3. Have mine taken off you by Putin one day when he's pissed off at the US State Department and wants to strut to the Russian electorate 4. Cry Seriously, you would be utterly insane to invest in Russia at the moment with money from US, UK or EU. The reason Rio Tinto are so reluctant to invest might well be because they know it could be taken off them tomorrow.
- r0muald 10y ago
  0. Look a map and observe that Serbia is a separate country from Russia, a few thousand kilometers away.
  - lisivka 10y ago
    Ukraine is separate country, and Moldova is separate country, and Belarus is separate country, and Afghanistan is separate country, and Caucasus is separate country, and so on...
    - r0muald 10y ago
      Not sure what point you're trying to make. Plus, Caucasus is not a country. Yes, Russia has a lot of international influence outside their borders, but that doesn't mean the ill-informed observation by the GP was meaningful in any way.
      - lisivka 10y ago
        Sorry, Georgia and Azerbaijan. So they have influence, including direct military operations, but their influence is not strong enough to make something to single mine? Let me remember that whole military operation in Ukraine is done by Russia to stop Shell from mining of natural gas in Eastern Ukraine.
        deleted 10y ago
        [deleted]
newacct23 10y ago
>$325 million, paid in Tesla stock. >Musk wrote in a June 21, 2014 letter to Simbol CEO John Burba Jesus. I probably wouldn't have taken this deal either because it's all in stock but damn they must be kicking themselves right now.
- ckastner 10y ago
  All in stock of a not-yet-profitable company who's stock price has been highly volatile in the past. I don't mean to disparage Tesla, but rather to emphasize that there's a difference between receiving $325 million in cash, $325 million in blue-chip stock, and these $325 million.
  - gondo 10y ago
    THIS! it seems like everyone simply assumes that current stock value = cash value. if it was true, than the offer would be $325m in stock OR in cash. but not even Elon think that offered stocks are worth $325m
    - an_account 10y ago
      That's not true. I think Elon thinks that $325m cash is worth less because he thinks the stock is going to go up, however he needs any cash he can get to grow the company. As a growing company you need cash to grow and must give up stock to do so
    - banktaoe 10y ago
      If they wanted to guarantee cash, they could've bought a collar by selling calls and buying puts. It would have a very small cost, and the deal's investment bankers could set it up, no problem. tl;dr: you're both extremely confident, ignorant, and wrong.
      - MagnumOpus 10y ago
        If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super short period (1 month, 3 month), it is an entirely different thing to: - But options for multi-year expiries (because that is how long the disposal will take, after the obligatory lockup)... - ... in a stock that is 1000x less liquid that your usual AAPL or GOOG... - ...on a short notice on $325 million worth of stock, i.e. a huge percentage of the free float of the stock, making it impossible to hedge for any bank that offers the collar. tldr: You are a bit too cocky given your lack of knowledge.
jeffwass 10y ago
The HN title is quite a misleading alteration of the actual title. There's no mention that the startup "refused" the buyout, and it was unclear why the negotiations fell apart. The actual article is simply titled "Tesla offered $325 million for Salton Sea startup". And here's a quote from the article giving a different picture : "The person with knowledge of the negotiations told a slightly different story, saying Musk shut down all discussions after seeing the $2.5 billion valuation from Jefferies. According to that source, Musk abruptly ended all negotiations after reviewing the valuation, never giving Simbol the chance to present a counteroffer to his proposed $325 million purchase price."
- chaseideas 10y ago
  Definitely seems like there was some creative liberty in the submission title. I suppose a "refusal" could be inferred by the lack of their acceptance on the initial buyout offer and their (apparent) rebuttal of a $2.5bil valuation. For instance, if I offered you a million dollars cash for your house and you came back to me with an appraisal saying it was valued at $20mil... I think it would be clear (or at least strongly insinuated) that you refused my offer of a million dollars. Thinking that's kinda what happened here? Seems like Elon didn't take to their method of countering and called the whole thing off. Just my $0.02 and I'm not privy to all the inside-details. Could've gone down entirely different than any of us know. Plus, it seems like there's a LOT of infighting among the co-founders and previous team. Will be curious to see if more information emerges.
  - Alexx 10y ago
    In the UK at least, under case law (Hyde v Wrench, 1840), if you give a counter offer it legally voids the original offer. So if you offer to buy something for £1m and the seller responds that they will sell it to you for £2m, the original £1m offer is legally terminated - so in the UK, legally speaking, this would count as a refusal. Unfortunately I'm not familiar with how this translates over to US law, but I'd be interested to find out.
    - dietrichepp 10y ago
chaseideas 10y ago
Like they say... hindsight is 20/20... Finding this piece really interesting though for other reasons. Had a similar idea for a project based in that area a couple years back. Imperial Valley (in general) strikes me as a HUGELY under-capitalized opportunity at the moment. As a San Diego native, grew up familiar with it as the cesspool and stink-puddle that it is... but, if you look into the history of Imperial Valley and Salton Sea (and the abundance of mineral-rich 'dust' and other waste) it's actually an extremely fascinating tale. Anyone want to put a few million into helping establish a similar project? Seems like there's way more than just Lithium to be monetized out there.
johnm1019 10y ago
The article raises a few interesting points I didn't know: - In SoCal there are several areas which have geothermal activity and correspondingly several electric plants based on that - This geothermal activity raises both hot water and a fair concentration of a brine solution containing many metals - The lithium isn't mined, they were getting it by processing this brine solution Based on that, and reading many comments that modern batteries also needs lots of Co, Mn, etc... I wonder if the brine water coming up from this area is basically 'battery soup'? Seems like a lot of potential value that is already being pumped out of the ground by someone else - who considers it a waste product!
- xchaotic 10y ago
  You can get 'geothermal' waters pretty much anywhere in the world, it only depends on how deep you dig (in some cases this is completely unviable from an economic point of view) You can then use the water for heating, extracting minerals, spas, swimming pools etc.
  - cjensen 10y ago
    Most places are wildly uneconomic for geothermal. The Great Basin is composed of Horst and Graben [1] (i.e. Mountain ridges separating basins) geology. H&G happens when the Earth's crust is stretched. The stretching also makes the crust much thinner than normal -- that's why there are tons of cider cones and old lava flows in the Great Basin region. [1] https://en.wikipedia.org/wiki/Horst_and_graben https://en.wikipedia.org/wiki/Horst_and_graben
    - labster 10y ago
      The Great Basin is usually described in English as basin and range. It's a part of the is a part of the Basin and Range Province.[1] [1]: https://en.wikipedia.org/wiki/Basin_and_Range_Province https://en.wikipedia.org/wiki/Basin_and_Range_Province
- ci5er 10y ago
  Yes, but it is pretty thin soup!
samfisher83 10y ago
It looks the investor wanted the company to go to BK. Maybe they were also the senior debt holder which means they could potentially get the company cheaper since senior debt holder have highest priority in getting paid back.
peter303 10y ago
Remember this isnt a proven technology yet (lithium brine mining). There are tons of promising projects in the sheltered environment of chemistry labs that dont scale up in the real world due to unforseen complications. I'd say 9 out 10 promising battery announcements fall into this category.
lifeisstillgood 10y ago
So roughly what we know can be summarised as - company has promising but not proven scalable means to extract lithium from drilling waste water. - company gets all stock offer from Tesla which to all intents and purposes is "if tesla succeeds you get rich, if not you fail as well." Not clear what voting rights there were. - company seems to have not responded one way or another. And who can blame them - they work for the dream, and the best offer is to take a part of someone else's lottery ticket. Turns out it was a good bet but who knew.
powertower 10y ago
For the curious, this is the patent for the tech - http://www.google.com/patents/US8637428 http://www.google.com/patents/US8637428

149 points by galori 10y ago

jrcii 10y ago

As someone who grew up in Palm Springs I can't believe there was a startup there. There is absolutely nothing going on there. Maybe it's changed in the last 10 years.

galori 10y ago

Apparently lithium gets mined. Who knew.

garyclarke27 10y ago

Tesla should buy the Jadar mine in Serbia, huge deposits of Lithium, Rio Tinto seem to have done nothing with it! Serbia could do with some positive investment, economy is still dire, lovely people who deserve a break.

dogma1138 10y ago
The amount of lithium in LiOn batteries is actually very small a common chemistry 18650 has between 0.3 and 0.7 grams of lithium per battery.
- SFJulie 10y ago
  The cumulative price of Li may be small, but since once used its recycling cost is higher than its extraction cost, then as a result, the price can only grow up (except when like with oil there is strong manipulation of the market by the banks). The beauty of a world which resources are finite is that cheap resources always finish to disappear.
- Reason077 10y ago
  More than 7000 of those cells go into a Tesla battery pack. That adds up to several kilograms of Li per vehicle!
  - dogma1138 10y ago
    Yes but you use more manganese or cobalt or w/e based on the chemistry of your battery than Lithium. Oddly enough if Tesla is going to buy mines for batteries Lithium most likely is not going to be their first buy. I don't know exactly what chemistry Tesla is going to end up using but if it's LCO/NMC which is 60%/20% cobalt they probably want to find a source of cobalt before lithium. If they are going to sploosh on super fancy NCA batteries (unlikely since they only do about 500 cycles, LCO and NMC are the most likely chem for EV's) which are only 9% cobalt that still probably makes sense since the world production of cobalt is about 10 times smaller than the production of Lithium.
    - PCMcGee 10y ago
      Musk mentioned nearly the exact percentages of metals used in the last Tesla shareholders meeting recently.
      - dogma1138 10y ago
        Do what are they? I couldn't easily find out, I've seen various sources quoting NMC and some indicating that they are switching to NCA.
  - imaginenore 10y ago
    7000 * (0.3 to 0.7) = 2.1 to 4.9 kg per car. At 400K preorders they will need 840 to 1960 metric tons of Li. Australia alone produces 13400 metric tons per year, Chile another 12900.

michaelbuckbee 10y ago

The facts are still a bit scarce, I wonder if their claims of a more efficient extraction process failed to scale up.

PaulRobinson 10y ago

1. Buy mine in Serbia 2. Invest hundreds of millions in mine 3. Have mine taken off you by Putin one day when he's pissed off at the US State Department and wants to strut to the Russian electorate 4. Cry Seriously, you would be utterly insane to invest in Russia at the moment with money from US, UK or EU. The reason Rio Tinto are so reluctant to invest might well be because they know it could be taken off them tomorrow.

r0muald 10y ago
0. Look a map and observe that Serbia is a separate country from Russia, a few thousand kilometers away.
- lisivka 10y ago
  Ukraine is separate country, and Moldova is separate country, and Belarus is separate country, and Afghanistan is separate country, and Caucasus is separate country, and so on...
  - r0muald 10y ago
    Not sure what point you're trying to make. Plus, Caucasus is not a country. Yes, Russia has a lot of international influence outside their borders, but that doesn't mean the ill-informed observation by the GP was meaningful in any way.
    - lisivka 10y ago
      Sorry, Georgia and Azerbaijan. So they have influence, including direct military operations, but their influence is not strong enough to make something to single mine? Let me remember that whole military operation in Ukraine is done by Russia to stop Shell from mining of natural gas in Eastern Ukraine.
      - deleted 10y ago
        [deleted]

newacct23 10y ago

>$325 million, paid in Tesla stock. >Musk wrote in a June 21, 2014 letter to Simbol CEO John Burba Jesus. I probably wouldn't have taken this deal either because it's all in stock but damn they must be kicking themselves right now.

ckastner 10y ago
All in stock of a not-yet-profitable company who's stock price has been highly volatile in the past. I don't mean to disparage Tesla, but rather to emphasize that there's a difference between receiving $325 million in cash, $325 million in blue-chip stock, and these $325 million.
- gondo 10y ago
  THIS! it seems like everyone simply assumes that current stock value = cash value. if it was true, than the offer would be $325m in stock OR in cash. but not even Elon think that offered stocks are worth $325m
  - an_account 10y ago
    That's not true. I think Elon thinks that $325m cash is worth less because he thinks the stock is going to go up, however he needs any cash he can get to grow the company. As a growing company you need cash to grow and must give up stock to do so
  - banktaoe 10y ago
    If they wanted to guarantee cash, they could've bought a collar by selling calls and buying puts. It would have a very small cost, and the deal's investment bankers could set it up, no problem. tl;dr: you're both extremely confident, ignorant, and wrong.
    - MagnumOpus 10y ago
      If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super short period (1 month, 3 month), it is an entirely different thing to: - But options for multi-year expiries (because that is how long the disposal will take, after the obligatory lockup)... - ... in a stock that is 1000x less liquid that your usual AAPL or GOOG... - ...on a short notice on $325 million worth of stock, i.e. a huge percentage of the free float of the stock, making it impossible to hedge for any bank that offers the collar. tldr: You are a bit too cocky given your lack of knowledge.

jeffwass 10y ago

The HN title is quite a misleading alteration of the actual title. There's no mention that the startup "refused" the buyout, and it was unclear why the negotiations fell apart. The actual article is simply titled "Tesla offered $325 million for Salton Sea startup". And here's a quote from the article giving a different picture : "The person with knowledge of the negotiations told a slightly different story, saying Musk shut down all discussions after seeing the $2.5 billion valuation from Jefferies. According to that source, Musk abruptly ended all negotiations after reviewing the valuation, never giving Simbol the chance to present a counteroffer to his proposed $325 million purchase price."

chaseideas 10y ago
Definitely seems like there was some creative liberty in the submission title. I suppose a "refusal" could be inferred by the lack of their acceptance on the initial buyout offer and their (apparent) rebuttal of a $2.5bil valuation. For instance, if I offered you a million dollars cash for your house and you came back to me with an appraisal saying it was valued at $20mil... I think it would be clear (or at least strongly insinuated) that you refused my offer of a million dollars. Thinking that's kinda what happened here? Seems like Elon didn't take to their method of countering and called the whole thing off. Just my $0.02 and I'm not privy to all the inside-details. Could've gone down entirely different than any of us know. Plus, it seems like there's a LOT of infighting among the co-founders and previous team. Will be curious to see if more information emerges.
- Alexx 10y ago
  In the UK at least, under case law (Hyde v Wrench, 1840), if you give a counter offer it legally voids the original offer. So if you offer to buy something for £1m and the seller responds that they will sell it to you for £2m, the original £1m offer is legally terminated - so in the UK, legally speaking, this would count as a refusal. Unfortunately I'm not familiar with how this translates over to US law, but I'd be interested to find out.
  - dietrichepp 10y ago

chaseideas 10y ago

Like they say... hindsight is 20/20... Finding this piece really interesting though for other reasons. Had a similar idea for a project based in that area a couple years back. Imperial Valley (in general) strikes me as a HUGELY under-capitalized opportunity at the moment. As a San Diego native, grew up familiar with it as the cesspool and stink-puddle that it is... but, if you look into the history of Imperial Valley and Salton Sea (and the abundance of mineral-rich 'dust' and other waste) it's actually an extremely fascinating tale. Anyone want to put a few million into helping establish a similar project? Seems like there's way more than just Lithium to be monetized out there.

johnm1019 10y ago

The article raises a few interesting points I didn't know: - In SoCal there are several areas which have geothermal activity and correspondingly several electric plants based on that - This geothermal activity raises both hot water and a fair concentration of a brine solution containing many metals - The lithium isn't mined, they were getting it by processing this brine solution Based on that, and reading many comments that modern batteries also needs lots of Co, Mn, etc... I wonder if the brine water coming up from this area is basically 'battery soup'? Seems like a lot of potential value that is already being pumped out of the ground by someone else - who considers it a waste product!

xchaotic 10y ago
You can get 'geothermal' waters pretty much anywhere in the world, it only depends on how deep you dig (in some cases this is completely unviable from an economic point of view) You can then use the water for heating, extracting minerals, spas, swimming pools etc.
- cjensen 10y ago
  Most places are wildly uneconomic for geothermal. The Great Basin is composed of Horst and Graben [1] (i.e. Mountain ridges separating basins) geology. H&G happens when the Earth's crust is stretched. The stretching also makes the crust much thinner than normal -- that's why there are tons of cider cones and old lava flows in the Great Basin region. [1] https://en.wikipedia.org/wiki/Horst_and_graben https://en.wikipedia.org/wiki/Horst_and_graben
  - labster 10y ago
    The Great Basin is usually described in English as basin and range. It's a part of the is a part of the Basin and Range Province.[1] [1]: https://en.wikipedia.org/wiki/Basin_and_Range_Province https://en.wikipedia.org/wiki/Basin_and_Range_Province
ci5er 10y ago
Yes, but it is pretty thin soup!

samfisher83 10y ago

It looks the investor wanted the company to go to BK. Maybe they were also the senior debt holder which means they could potentially get the company cheaper since senior debt holder have highest priority in getting paid back.

peter303 10y ago

Remember this isnt a proven technology yet (lithium brine mining). There are tons of promising projects in the sheltered environment of chemistry labs that dont scale up in the real world due to unforseen complications. I'd say 9 out 10 promising battery announcements fall into this category.

lifeisstillgood 10y ago

So roughly what we know can be summarised as - company has promising but not proven scalable means to extract lithium from drilling waste water. - company gets all stock offer from Tesla which to all intents and purposes is "if tesla succeeds you get rich, if not you fail as well." Not clear what voting rights there were. - company seems to have not responded one way or another. And who can blame them - they work for the dream, and the best offer is to take a part of someone else's lottery ticket. Turns out it was a good bet but who knew.

powertower 10y ago

For the curious, this is the patent for the tech - http://www.google.com/patents/US8637428 http://www.google.com/patents/US8637428