Bill to tax lithium as an energy mineral passes House

PIERRE – The South Dakota House of Representatives sent a bill classifying lithium as an energy mineral to the Senate on Thursday. 

If passed, the re-classification would subject the high-demand mineral, used to power cell phones, laptops and electric vehicles, to the state’s severance tax.

The severance tax is imposed on the extraction of natural resources, such as oil, coal and gas. The tax is typically based on the value or volume of the resources extracted.

House Bill 1072, which passed the House with a vote of 57-13, aims to generate additional revenue for the state by taxing lithium as the state does oil, coal, or natural gas.

The bill was brought by Rep. Kirk Chaffee, R-Whitewood. Lithium miners already have claims to about 50,000 acres of the Black Hills Forest. 

“That’s almost a 300% expansion within this last year,” Chaffee said.

The bill received support from both sides of the aisle, but Rep. Oren Lesmiester, D-Parade, questioned if the bill would create a slippery slope to the taxation of other metals.

 Chaffee said no.

“I consulted with the School of Mines to make sure that I’m talking about the stuff you’d be using to put in the batteries,” Chafee said.

Rep. Rebecca Reimer, R-Chamberlain, asked Chaffee if the companies mining the Black Hills are U.S. companies.

“The research I’ve done on it shows most of these are out of the country,” Chaffee said. “The one that holds, I believe, 30,000 of those 50,000 acres was a company out of Australia.”

The bill now moves to the South Dakota Senate. If passed, it will head to the desk of Governor Kristi Noem.