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An ambitious proposal to build 124,000 acres of solar-evaporation ponds in Millard County to produce specialty fertilizers could get up to $112.5 million in state financial assistance.
Crystal Peaks Minerals Inc. would get the tax credit after it installs electric and natural-gas transmission lines, power substations and rail facilities, and after it improves roads to the dry bed of Sevier Lake, where the ponds are planned.
The post-performance tax credit was approved May 19 by a Utah Office of Energy Development board. It would cover half the cost of the improvements.
"In providing this extremely significant tax credit, the state has shown how it can partner with companies like Crystal Peak to improve infrastructure and bring hundreds of jobs to rural Utah," said Lance D'Ambrosio, chief executive of Crystal Peak, which is based in Sugar House and trades on the Toronto Stock Exchange.
The company projects that the operation will create 200 jobs, yielding 300,000 tons of fertilizer-building potash annually over the pond system's 30-year life.
Crystal Peaks hopes to begin building the ponds next year and to start production in 2020, provided that the project passes a Bureau of Land Management environmental impact study that's underway.
Before it can begin work, however, Crystal Peaks also must secure financing for the project itself — on top of the infrastructure costs.
D'Ambrosio said the incentive "represents about one-third of the project's capital expenditures," previously pegged at close to $300 million.
Laura Nelson, executive director of the state Office of Energy Development, said the Crystal Peaks project fits the provisions of the "High Cost Infrastructure Tax Credit," passed by the 2016 Legislature to promote business expansion and natural-resource development, largely in rural Utah.
"In many cases, but for the lack of infrastructure, a company would locate in a rural community," said Nelson, a member of the Utah Energy Infrastructure Authority Board that authorized the tax incentive. "This is absolutely in line with the intent of the law in driving jobs and economic diversity to our rural areas."
Nelson said Crystal Peaks has worked diligently for eight or nine years to bring the project to fruition. It has acquired water rights and conducted preliminary economic assessments, feasibility studies and engineering reviews while the environmental study was being prepared.
"These are very long-term projects that take time and commitment," she added. "They're on a trajectory now. They've made important strides."
Millard County Economic Development Director Scott Barney is hopeful the project will materialize. But not wanting to get too excited about it quite yet, he said, "I'll believe it when I see it. But I have to give Crystal Peaks credit because they've been at it for so long."
Barney also would like to see an industrial park come together around the infrastructure installed for the pond system. Nelson said that could be possible.
Besides the jobs and tax revenue the operation would provide, D'Ambrosio said the pond system also will reduce the amount of west-desert dust blowing east toward Utah's population center along the Wasatch Front.
"We are consuming water in the lake[bed] that's brine already. There isn't a higher and better use of that water," he told the Infrastructure Authority last month. "It actually becomes our friend again if it sits on top of the surface and suppresses dust."
To become operational, he said, Crystal Peaks will build 15 miles of new road, put a seal coating on existing dirt roads, and install 35 miles of pipelines, 52 miles of overhead transmission lines, a rail spur and the electrical substation.
The primary goal is to extract potash from the ponds, but the process also could yield valuable minerals such as magnesium and lithium. Crystal Peaks plans to convert its potash into potassium sulfate, which is used on high-value crops that do not tolerate chloride.
In financial disclosures, the company claimed the net after-tax value of its annual production would be $629 million at current prices.
Crystal Peaks' stock closed Friday on the Toronto exchange at 47 cents per share (Canadian).
Its 52-week high was 56 cents in late January after bottoming out at 18 cents a share last September.