Utah has successfully bid to seize control of the defunct US Magnesium plant, and it plans to donate the massive volume of water it evaporated each year to benefit the Great Salt Lake.
The company declared bankruptcy in September following years of insolvency, a catastrophic equipment failure in 2021 and after it fell short on an environmental cleanup contract with federal regulators. State regulators, meanwhile, denied the company’s attempts to extend intake canals in 2022 and continue siphoning away the Great Salt Lake’s record-low water.
The bankruptcy court opened the magnesium plant’s assets to auction on Jan. 21. US Magnesium’s parent company, New York-based The Renco Group Inc., put forth its own “stalking horse” bidder called LiMag Holdings. But the Utah Division of Forestry, Fire and State Lands ultimately won out with a $30 million offer, court documents show. The auction closed on Friday, Jan. 23.
The sale includes 4,500 acres along the lake’s southwest shore, along with all the plant’s infrastructure, machinery and water rights. The state will donate the water to benefit the neighboring lake, Fox 13 reports.
Lawmakers fell short of confirming that donation during a news conference on Capitol Hill Tuesday.
Details of the agreement were still being worked out, said Senate President J. Stuart Adams, R-Layton, including the specifics of keeping the water in the Great Salt Lake.
“We’re trying to make sure that we don’t let that water go into somebody else’s hands,” Adams said. “We’re trying to save the lake. … It’s a big deal.”
The Division of Forestry, Fire and State Lands manages the Great Salt Lake’s lakebed, as well as leases to companies that extract minerals from the lake’s brine.
It filed a lawsuit against US Magnesium in December 2024 after the company failed to meet its environmental obligations, including construction of a barrier wall meant to prevent acidic pollution from spilling into the neighboring lake. The division also moved to revoke US Magnesium’s ability to operate on state lands, and asserted it had illegally allowed other companies to trespass on its leased property to produce minerals.
In September, the same month US Magnesium declared Chapter 11 bankruptcy, the division called on the company to stop pumping large volumes of water from the Great Salt Lake, which it was still using to produce road salts.
US Magnesium pumped more than 52,000 acre-feet of lake brine and groundwater in 2024, according to state information. That’s enough water to support around 100,000 Utah households.
A division spokesperson declined to comment until the court proceedings are finalized.
A declaration by the division’s deputy director, Ben Stireman, filed Monday shows the state initially bid $15 million for the company’s land, water rights and mining agreements.
Stireman also noted that his division “disputed” the way US Magnesium conducted the auction.
“The Auction was conducted in a manner that heavily favored LiMag’s bids,” he wrote in the declaration, “and disadvantaged” the state.
Ultimately, however, the division’s offer prevailed.
The state had a duty to purchase US Magnesium’s assets, Stireman said, to prevent “further waste” from the company and aid Great Salt Lake management responsibilities.
Parties expect the sale to close Feb. 2, according to court filings. The state may assume all of US Magnesium’s environmental liabilities as part of the offer, court transcripts show.
Asked about those environmental responsibilities during Tuesday’s news conference, Adams said the state “probably” has an obligation to cleanup the magnesium plant’s mess, and it remains “committed” to improving the Great Salt Lake, which hovers just a few feet above the record-low elevation it set in 2022.
“Do we love the lake? Yes, we do,” Adams said. “We surely don’t want to leave the lake in the kind of condition US Mag left it in.”
The EPA previously told The Salt Lake Tribune that it will take “well over” $100 million to clean up the plant’s decades of environmental problems.
Wells Fargo, US Magnesium’s largest lender, filed an objection to the state’s bid Monday, noting the division has no intention to keep the company operational. As part of its purchase, the state signaled its intent to purchase and eliminate US Magnesium’s mineral lease and royalty agreement — the “cornerstone” of the plant’s business. That makes the sale closer to a chapter 7 liquidation rather than a chapter 11 restructuring, Wells Fargo argued.
This is a developing story that will be updated.