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I think that logically, it doesn't make sense for Maine to change its laws to allow this to move forward. It's worth $1.5B and there are about 1.5M people in Ma
by mdasen 5y ago
I think that logically, it doesn't make sense for Maine to change its laws to allow this to move forward. It's worth $1.5B and there are about 1.5M people in Maine. That's $1,000 per resident. Given that there are costs to extract the metal from the ground, let's say that 20% of that $1.5B could be profit (which I'm guessing is a very high estimate). That means $200 per Maine resident. Given that Maine doesn't own the land/mineral rights, let's say they can put a 30% tax on those profits. $60 per resident.
Realistically, $1.5B worth of lithium is a tiny amount of value for a US state. If I were Maine, I'd say no at $1.5B. You're probably going to get less than $60 per Maine resident - and that's a one-off $60, not even an annual $60.
The article keeps talking about how we need lithium. Ultimately, we don't seem to need it that much given how cheap it is. If I were Maine, I'd say "not now". If Lithium prices go up 100-1,000x in the future, then reevaluate. $6,000-$60,000 per Maine resident might be a useful amount of money. $60 isn't.
At current prices, any environmental damage is likely to cost more than the taxes on the profits would cover. $90M in taxes (30% of a 20% profit margin) won't clean up a lot.
I'm not saying that it's a global optimum for Maine to leave this lithium in the earth. I'm just noting that there isn't a lot of incentive for Maine to extract it. The article talks about other countries with less strict labor and environmental rules. That is true, but why should Maine risk its environment for such little money?
Why should Maine risk environmental damage for $60 per person? $90M in tax revenue is nothing compared to the cost to clean up environmental disasters. It's costing over $6M to clean up a single park in my town, never mind the type of environmental damage that might be caused by mining 11M tons of lithium. It seems like it would be foolish for Maine to alter the laws to allow the mining to take place at current prices.
- SuoDuanDao 5y agoI don't disagree with your analysis, but it's important to remember that most states think of the 80% of that $1.5B that isn't profit as going to their citizens in the form of local spending.
- volkl48 5y agoFor a bit of context: This happens to be in the same vicinity as the most popular ski resort in the state, and a number of other popular outdoor attractions. It's not quite your average rural economy that's desperate for any sort of new business/jobs/investment. ------ A mine has to be weighed against the risk it represents to their existing economy - both in actual impacts of environmental disasters, and reputational if there's any negative stories coming out about it. Tourists don't want to go have their destination wedding in the town that's in the news regularly because of X or Y pollution, even if they can't see it and it's not a risk to them on their visit.
- SuoDuanDao 5y agoThat does change the metrics from the usual! No wonder interest is scarce.
- the-alchemist 5y agoExcellent analysis. People forget the economics of things from the state / people's perspective. Also, a certain number of people, very small but not zero, will get sick and die. All of those nasty diseases that come from any mine operation, especially something nasty like lithium. Those sick people will go on Maine's disability / unemployment insurance / LTC / Medicaid / Medicare's system. Some of those people will live decades with cancer, their medical care paid for by the state (as it should). At current prices, like you said, it might literally cost Maine more to open the mine than to leave the lithium in the ground, especially once you factor in environmental cleanup and healthcare costs.
- Ekaros 5y agoAnother viewpoint to consider this is how long will it take to exploit this? 20 years, that is 75M in revenue per year, 30 years 50M and 50 years would be 30M. Not actually that high revenue numbers. 20% as profit from those, which sound optimistic would be 15, 10 or 6 million a year. Now tax those and on scale of state it isn't very big once again...
- aww_dang 5y agohttps://bangordailynews.com/2018/03/02/news/lobster-supply-chain-contributes-1b-to-maine-economy-each-year-study-finds/ https://bangordailynews.com/2018/03/02/news/lobster-supply-c... >The estimated $1 billion impact is on top of the income that lobstermen earn when they bring their catch to shore and sell it, which in 2017 was $433 million statewide. According to this study Maine nets 1.5B per year from lobsters alone.
- masklinn 5y agoAlso for an other reference, Maine's GSP is 52 billions, so that's a week and a half of it, as a one-shot.
- dboshardy 5y agoYou're assuming they're not thinking about it as a potential lobbying payday for the policy-makers themselves.