Legislature intends to rein in Compass Minerals’ operation on the north arm
Utah House Majority Leader Mike Schultz, R-Hooper, said Compass Minerals operating on the north arm of the Great Salt Lake is behaving as if it is the “wild wild West,” and it is time the company is tamed when it comes to its operations.
Schultz opened a bill file this week to foster legislation he says will do whatever is within the state Legislature’s purview to rein in the company, which recently raised the ire of Utah regulators because of a pilot project to mine lithium the state says was unauthorized.
“So Compass is interpreting their agreement to show that because lithium is technically a salt, their agreements with the state cover that,” Schultz said. “State Forestry and Fire says, no, no, no. You still have to have a separate agreement with the state of Utah for every individual mineral that you produce. And, then also a royalty agreement has to be assigned to that and they don’t have that royalty agreement.”
Schultz asserted too, that collectively the mineral extraction makes “hundreds and hundreds of millions of dollars a year.” The industry as a whole pays the state about $11 million annually in severance taxes.
A company under scrutiny
The issue of Compass Minerals’ operation on the eastern shore of the Great Salt Lake came up in discussion in a recent meeting of the Legislative Water Development Commission.
Statements made by Jamie Barnes, the director of the Utah Division of Forestry, Fire and State Lands, as well as a few lawmakers, prompted the company’s chief executive officer to issue a letter to commission members disputing what was said.
Kevin Crutchfield, Compass Minerals’ CEO, said he was both “surprised and deeply disappointed by representations made to the commission.”
He added that among the 10 leases the company has with the state, it has the authority to mine “salts and salt products,” and the right to mine “salts and other minerals dissolved or suspended in the water of the Great Salt Lake.”
He also pointed to documentation from the U.S. Geological Survey about lithium’s classification.
“To provide examples, a 2017 United States Geological Survey report on critical mineral resources noted that lithium carbonate is commonly produced from brine when reacted with sodium carbonate. That same report states that lithium chloride and bromide are salts.”
Compass is a leading global provider of salt, sulfate of potash and magnesium chloride. It is the only domestic producer of sulfate of potash.
Crutchfield also emphasized that Barnes’ assertion that Compass had not been forthcoming with its lithium project to the division is inaccurate, noting there was a public presentation by a company executive at the Great Salt Lake Summit hosted by Utah House Speaker Brad Wilson, R-Kaysville, in January 2022 and a meeting with leadership of the Forestry Fire and State Lands Division later that year.
But lawmakers have been concerned about receiving accurate information related to the mineral industries operating on the Great Salt Lake, if the state is getting fair value for those resources, in addition, if companies are engaged in best practices protecting the lake and the companies themselves.
HB513, which passed last year, authorizes a study probing those factors.
Barnes said there is wide disagreement between Compass and regulators, adding the state says each lease requires specificity for mineral extraction.
Water and Compass Minerals
Schultz said his bill will address a number of issues in the arena of mineral extraction on the Great Salt Lake that are within the statutory purview of the legislature.
But another big issue is the water, the rights that Compass Minerals holds and how much it can deplete.
Schultz says the amount is staggering.
“One of the biggest concerns is the lithium and with their 400,000 acre-feet of water. Lithium is so valuable, do they actually increase their production to get more lithium?”
Compass has water rights that Schultz said are the equivalent of one and a quarter of what Jordanelle Reservoir holds or the capacity of almost six Echo Reservoirs.
Historically, he said they use 170,000 acre-feet but did not take that much last year.
“We’re still trying to understand what we can do with their water rights, honestly,” he said.
He said the problem is the water Compass uses is depleted, which means it is not returned to the lake. That is in contrast to areas along the northern Wasatch Front, where much of the water used finds its way back to the lake.
Schultz said it is frustrating because Utah communities and the state have been aggressively pursuing water conservation due to the drought and to help lake levels, including that of the Great Salt Lake.
And while the south arm of the Great Salt Lake has risen more than five feet, the north arm remains only six inches above the record low.
“We’re straining at gnats while they are shoving camels down our throats,” he said. “There needs to be some significant change going forward. ... I think we started with realizing what’s really been happening out there and that it is still the wild wild West, where virtually there’s not a lot of regulation.”
A previous version of this story incorrectly stated the amount of severance tax paid to the state of Utah from the mining extraction industry. The correct figure, collectively, is about $11 million.
