Smackover Lithium receives approved royalty rate,seeks to help U.S.pass China in lithium race

Things seem to be going in the right direction for Standard Li’s South West Arkansas Project.

Just last week, on May 28, the Arkansas Oil and Gas Commission (AOGC) unanimously approved a 2.5 percent royalty rate for Standard Li’s South West Arkansas Project in both Columbia and Lafayette counties.

As per the press release, this marks the very first time that AOGC has approved a royalty rate for lithium from brine extraction, so this is a crucial precedent for lithium development companies with operations in Arkansas.

Lithium brine extraction is a process where lithium is extracted from highly saline groundwater, called brine, found in certain geographic locations.

The process involves drilling wells to access the underground brine, pumping it to the surface and using evaporation ponds to concentrate the lithium.

The lithium royalty will be paid to brine owners in addition to the brine fee of $65.05 per acre per year, which brings the total proposed royalty compensation to about three percent based on current lithium prices.

Smackover Lithium (Li) is a joint venture between Standard Lithium and Equinor with projects planned in South West Arkansas and East Texas.

It is said that the lithium brine in the Smackover Formation is considered “world class”.

The Reynolds unit has planned production capacity of 22,500 tonnes per year of battery-quality lithium carbonate once in full commercial production, expected in 2028.

Also, there was an article written in the Financial Times recently about the implications for East Texas concerning the Smackover Formation.

The Smackover Formation is a massive aquifer that stretches from Florida to Texas and contains some of the highest lithium concentrations in North America The article written explains that the Smackover Formation is expected to play growing role in the U.S. push to secure a domestic supply of lithium – a critical mineral for batteries in electric vehicles, laptops, cell phones and national defense systems – through Direct Lithium Ex- traction (DLE), which separates lithium from underground brine rather than through traditional hard rock mining or evaporation ponds.

This could become a multibillion-dollar industry in the U.S. and the implications for East Texas are significant.

The article also emphasizes how China currently dominates lithium refining and battery production.

The global lithium-ion battery industry is dominated by China. Chinese companies supply 80 percent of the world’s battery cells and account for nearly 60 percent of the EV battery market.

There are U.S. companies that produce batteries which rely on lithium-ion cell components produced by Chinese manufacturers.

Some Western countries are concerned that if lithium supplies fall short, Chinese companies will meet the needs of their own rapidly growing EV market first.

This development here in our region is vital in the race to secure what is needed so we don’t fall to having to depend on China or having China corner the market.

DLE technology could potentially reshape global lithium markets over the next decade.

Drilling for oil in East Texas dates back to the early 20th century and the East Texas Oil Field is considered the largest contiguous oil reservoir in the U.S. outside of Alaska and is the largest in total volume of oil recovered.

With those decades of oil and gas development, East Texas could definitely benefit from DLE.

With the technology set in place, the Smackover plant is the blueprint for future plants especially in East Texas.

Jesse Edmonson, Director of Government Relations at Smackover Lithium, had this to say, “Smackover Lithium believes East Texas has the potential to lead the nation in lithium production. The resources here are among the best in North America and with the right technology and partnerships, we can produce lithium in a way that’s smart, efficient and respectful of the people who live and work on this land. Our goal is to build a true partnership with East Texans by creating jobs, investing in the community and bringing opportunity to landowners.”

For more information about the SWA Project and Smackover Lithium, please visit www.smackoverlithium.com.