The California Air Resources Board has strewn a major roadblock in the path of the effort to preserve the 153-year-old mining operation at the extreme northwest corner of San Bernardino County through a complicated bankruptcy protection ploy.
Searles Valley Minerals is the corporate successor to the San Bernardino Borax Mining Company that was created in 1873 by John Wemple Searles, who first arrived in the West Mojave Desert as a gold and silver prospector in the 1860s. He encountered copious quantities of white crystalline borax on the bed of what is today known as Searles Dry Lake near the town of Trona, which is located on the San Bernardino County side of where San Bernardino County, Inyo County and Kern County converge. John Searles initially used 20-mule teams to haul borax in wagons roughly 170 miles to San Pedro. In 1876, when the Southern Pacific reached the community of Boron, Searles was able to reduce the one-way distance of that delivery by 91 miles. In 1895, Searles sold the San Bernardino Borax Mining Company was sold by Searles to the Pacific Coast Borax Company, owned by the so-called “Borax King” – Francis Smith. Simth discontinued production at Searles Lake in 1896, but in 1913, the British-owned Consolidated Gold Fields Company, which had extensive holdings in South Africa, founded the American Trona Company. In 1914, the company completed the Trona Railway line from Searles Station south to a junction with the Southern Pacific Railroad, simultaneously establishing the company-owned town of Trona, named for crystals of soda ash formed by the evaporation of chemical-rich water commonly found in the lake bed in combination with borax. The American Trona Company began production of potash, an ingredient in gunpowder, in 1915 as the First World War, then referred to as the Great War, was intensifying. In 1926, after the American Trona Company became the American Potash & Chemical Corporation, it began producing borax, soda ash, and sodium sulfate. During the Second World War, the productions of those chemicals was crucial to the U.S. military and with the expansion of the operations at Trona, the town grew in population to over 4,000. Trona existed as a self-contained company town, wholly operated by its resident mining company to house employees. The company had housing tracts constructed for its employees. Employees were paid in company scrip rather than U.S. currency. The mining company also a scrip-accepting for-profit grocery store, a school, a library, a bowling alley, and other recreation facilities. Multiple restaurants set up operations in the town.
Following the war, American Potash made several strides in the production of chemicals from the dry lake. In 1962 the company received industrial recognition for its groundbreaking solvent extraction process, entailing the evaporation of chemical-rich water, to recover boric acid and potassium sulfate from weak brines. In 1974 American Potash and Chemical was acquired by Kerr-McGee. Under Kerr-McGee, production of chemicals out of Searles Dry Lake reduced. Kerr-McGee sold the Searles Valley production facilities in 1990, to capital investors D. George Harris and Associates, which formed the North American Chemical Company. North American sold the operation to the IMC Global Corporation in 1998. In 2004, Sun Capital, LLC purchased IMC Global corporation and the facilities at Trona and the historic Westend Chemical Plant on Searles Lake were renamed Searles Valley Minerals, Inc.
In November 2007, Karnavati Holdings, a subsidiary of the Indian corporation Nirma Limited based in Ahmedabadd, India, purchased Searles Valley Minerals Corporation from Sun Capital Partners.
The Argus Cogeneration Plant is part of the Searles Valley Minerals Corporation operation. It is the last coal-fired power station still operating in California. Unit 1 was commissioned in 1978 and has a capacity of 63 megawatts. Unit 2 was commissioned in January 1991 and had a capacity of 103 megawatts before ceasing operations on October 2, 2014.
Searles Valley Minerals, based upon its extraction of boron and other minerals like lithium carbonate from brines at Searles Lake, was consistently profitable.
In 2019, on July 4 and July 5, there were a series of seismic disturbances in the northwest Mojave Desert, a magnitude 6.4 event, occurred on the morning of July 4 at 10:33 a.m. about 8 miles west-southwest of Trona, along a previously unnoticed northeast to southwest trending fault. This was followed by a magnitude 5.4 quake on July 5 at 4:08 a.m. and a magnitude 7.1 quake later that same day at 8:19 p.m., which became the mainshock and the strongest in California in 20 years. The quakes caused significant damage to homes, businesses, and infrastructure.
The following year, with the advent of the COVID-19 pandemic, there was significant impact to the economy in Trona as well as to the operations of Searles Valley Minerals.
Before the earthquakes, Searles Valley Minerals reported an operating profit of $56 million in 17, $46 million in 2018 and $52 million in 2019. Shortly thereafter, the company moved into the red.
According to the company, it was hit with a five-way whammy: the impact of the earthquakes, sales slow-downs brought on by the COVID-19 crisis, soda ash market oversupply brought on by China dumping lower cost synthetic soda ash on the market, regulatory pinching by the State of California and IRS interpretations that has left it owing Uncle Sam nearly $2.2 million in current and back taxes.
Instead of turning a profit, the company and its two affiliates, the Trona Railway Company and Searles Domestic Water Company, were losing between $3 million and $4million per month – an approximate annual operating deficit of $42 million per years.
In recent months, the company reduced its production even further – entailing the termination of 46 percent of its personnel – consisting of 240 employees and independent contractors – thereby depriving itself of income needed to pay down its crushing debt.
On June 15 the company filed for Chapter 11 bankruptcy protection, stating it needed to hold all of its creditors at bay while it pursues a “free and clear” sale of its entire operation to one of its customers, TATA Chemicals North America Inc. pursuant to a document titled The Debtors seek entry of interim and final orders authorizing Soda Ash Supply and Liquidity Agreement for $20 million, which would be used to satisfy a portion of the company’s outstanding debt. Under the arrangement with TATA Chemicals North America Inc., Searles Valley Minerals would be provided with an immediate $7 million initial liquidity advance upon U.S. Federal Bankruptcy Judge Brendan L. Shannon’s say-so. In addition, TATA would take over the production operations and meet Searles Valley Mineral’s outstanding commitments to deliver soda ash to its existing customers at a set price per metric ton plus freight. TATA would make an infusion of cash into the operation consisting of cash advances to suppliers of services and goods needed to sustain the chemical production operation.
The plan was that with Judge Shannon’s entry of an interim order, by which Nirma was to make a guarantee of the funding being distributed to the key entities sustaining the operation and a plan prioritizing payments to existing creditors would be followed by an final liquidity advance of $13 million when Judge Shannon issued his final order. TATA would then walk away with the assets now in the hands of Searles Valley Minerals and its corporate parent Nirma.
In its past operations, however, Searles Valley Minerals had relied upon the coal -fired Argus Cogeneration Plant, which was subject to a cap-and-trade agreement with the California Air Resources Board. Under that agreement, Nirma/Searles Valley Minerals were allowed to use coal, which upon being burned releases smoke into the atmosphere that contains carbon dioxide, sulfur dioxide, nitrogen oxides, carbon monoxide, particulate matter fly ash and bottom ash, mercury, arsenic, lead and volatile organic compounds. For the California Air Resources Board to tolerate those pollutants being released, Searles Valley Minerals was subject to having to purchase offsetting pollution credits. Searles Valley Mineral’s running tab on the purchase of those credits stands at $76,318,424.00.
The California Air Resources Board has petitioned Judge Shannon, whose court is located in Wilmington, Delaware, to structure his order such that the purchaser of Searles Valley Minerals’ assets in the Chapter 11 sale also takes on responsibility for the $76,318,424 in cap-and-trade debt the company has accumulated.
In its Chapter 11 filing, which is on the Federal Bankruptcy Court’s books as Case No. 26-10966, Searles Valley Minerals sought an expedited dispossession process, known as a court-supervised Section 363 sale, with an auction of the company’s complete assets scheduled for next Monday, August 24, 2026 and a sale hearing on Wednesday, August 26, 2026. The California Air Resources Board’s petition is to be heard by Judge Shannon at that time. Judge Shannon has discretion over whether saddling TATA or the entity that outbids it will have to take on Searles Valley Minerals’ liabilities in order to assume its assets. If Judge Shannon ascertains that the California Air Resources Board’s demand that Searles Valley Minerals’ cap-and-trade debt be paid by the entity purchases the mining operation, the buyer would see its cost on the purchase – now set at $20 million – escalate by $76,318,424 to $96,318,424, to be paid up front or over time from the income of the mining operation at a rate to be set by the court.
For TATA, which was already calculating that it would need to make hefty investments to create a powerplant to produce heat and electricity without relying on coal, this appears to be a deal-breaker.
Nirma falls among the top 200 of India’s corporations and within the top ten in the country’s industrial/manufacturing segment. Nirma controls Searles Valley Minerals through Karnavati Holdings, Inc., which is wholly owned by Nirma. According to the totality of entries in Case No. 26-10966, Searles Valley Minerals, Searles Domestic Water Company, LLC, and Trona Railway Company, LLC have liabilities totaling more than $431.
The City Group/Capital Finance has a claim for 1,329,183.55.
Trona Railway Company has a claim for $83,628,022.95
Southern California Edison has a claim for $1,343,112.82.
San Bernardino County has a claim for $3,636,073.12.
Process Equipment, Inc., doing business as Process Barron, has a claim for $3,178,916.26 and another for $2,541,948.00.
Pacific Gas & Electric (PG&E) has a claim for $1,014,206.30 and another for $2,020,367.83.
The Port of San Diego has a claim for $309,984.00 and another for $884,522.40.
Nirma Limited has a claim for $1,574,100.00.
Navin Overseas Fzc has a claim for $1,423,941.00.
Metropolitan Stevedore Company has a claim for $4,020,670.87.
Karnavati Holdings, Inc. has a claim for $135,198,062.90.
Infinity Asset Holdings has a claim for $808,700.00.
Haynes Building Service, L.L.C. has a claim for $205,657.40 and one for $300,113.32.
HPC Industrial Services, LLC has two claims for $321,237.70.
HSBC Bank USA, National Association has a claim for $25,989,612.00.
GATX Corporation has a claim for $11,818,368.00.
Gatx Rail,A, a division of Gatx Financial, has a claim for $368,775.00.
Bank & Trust Company (as successor by merger to CIT Bank, N.A.) filed a claim for $1,082,537.50.
First-Citizens Bank & Trust Company (as successor by merger to CIT Bank, N.A.) filed a claim for $85,628.64.
The Department of Treasury and the Internal Revenue Service filed a claim for $2,190,773.87.
Delta Pump Systems Inc., als known as Delta Pumps & Systems, filed a claim for $218,763.64 and a claim for $209,510.24.
D2, known as D Squared Industrial Services LLC, filed a claim for $1,444,838.16
Constellation NewEnergy – Gas Division, LLC filed a claim for $3,518,795.89 and another for $2,639,006.28
Continental Labor Resources filed a claim for $266,870.08 and another for $311,250.70
CIT Equipment Financing, LLC, also known as the CIT Group/Equipment Financing, Inc., filed a claim for $3,942,031.00 and another for $651,686.92.
The Bakersfield Machine Company filed a claim for $748,427.71.
Best Best and Krieger LLP, which represented Searles Valley Minerals in its legal effort to preserve its water rights, filed a claim for $1,037,304.65.
Applied Industrial Technology filed a claim for $978,763.15.
XL Specialty Insurance Company has a claim for $3,472,037.00.
Walter’s Wholesale Electric Company has a claim for $442,280.46.
The Union Pacific Railroad Company has a claim for $472,373.86, another for $3,482,798.86 and a third for $3,019,913.30.
There were claims for no specified amount of money, i.e., $0.00, by the states of New York, North Carolina and Michigan, as well as the California State Water Resources Board, the San Bernardino County Fire Department, the Wyoming Department of Revenue, the Oregon Department of Revenue and the Montana Department of Revenue. Those claims are made as “place-holders,” meaning the amounts are to be filled in when Judge Shannon reaches the stage where repayment prioritization takes place, if ever.