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Permalink Reply by Skip Peel - Mineral Consultant on January 30, 2025 at 2:07

I have a request.  As Keith continues to work to bring back some website functions, I'd like to solicit replies from members who received an email notice for this new discussion.  Also please let me know if you did not receive a notice and found this discussion when you logged on.  Thanks.

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Permalink Reply by Skip Peel - Mineral Consultant on January 30, 2025 at 5:30

Standard Lithium and Equinor will seek their own royalty rate for rebranded "Smackover Lithium" project

• Mike McNeill, publisher and editor Jan 30, 2025 www.magnoliareporter.com

STAMPS -- Partners in a joint venture to produce lithium south of Lewisville will ask the state to set a royalty rate for their project, separate from negotiations under way by other potential lithium producers, property owners and the Arkansas Oil and Gas Commission.

That may have been the most important news from a public meeting held Wednesday, January 29, 2025 at Lafayette County High School featuring local officials for Standard Lithium and Equinor. They are involved with a $1.5 billion project to extract brine from beneath Columbia and Lafayette counties, strip lithium from it, and then return the brine back into the massive Smackover Formation.

Among other things, the officials also said:

-- They’re not worried that a recent $225 million federal Department of Energy grant made by the Biden Administration to build the production plant will disappear due to executive orders by the Trump Administration to freeze federal grant and loan programs. One speaker said that lithium’s status as a strategic metal that needs to be refined in the United States is a point of bi-partisan agreement.

-- The companies’ timeline for the start of production is mid-2028.

-- The companies are rebranding their joint venture in the two counties as “Smackover Lithium,” and are working toward creating a larger community presence.

Standard Lithium has operated a commercial-scale lithium production facility near El Dorado for several months – the outgrowth of a pilot plant established in 2019 on the grounds of Lanxess’ bromine plant. Standard Lithium hopes to eventually sell the lithium it produces in El Dorado, but the company and others looking at lithium production in the region are on hold until the Oil and Gas Commission sets the royalty producers will have to pay landowners for the right to extract lithium.

Last year, interested companies jointly proposed a rate of 1.82 percent. The commission rejected that rate as too low. The South Arkansas Minerals Association – a group of property owners – wants the companies to pay a 12.5 percent royalty.

The Columbia-Lafayette project proposes to draw brine from a separate production unit than the El Dorado area plant.

“We’re moving forward with our own (royalty rate) application,” said Jesse Edmondson of Standard Lithium. “It will come out some time in the next six months. I don’t want to put any more of a timeline on it than that. But this is absolutely, front and center, something that has to get done. It has to get resolved before the project can move forward.”

“We’re in close communication with the AOGC, with the commissioners, with our peers in the industry, but the application you will see will not be a joint application. It will be specifically from our company and it will be specifically for this project in Lafayette and Columbia counties,” Edmondson said.

Earlier, Edmondson said the royalty has to be fair to all parties.

“It has to allow us to make an investment in the project. When you go out and raise over a billion dollars, it turns out that it’s not easy. It doesn’t matter how good your project looks on paper. You’ve gotta convince folks that you’ve got the best project in the world. When you do that, you’re up against every project and their royalty structure.

“There’s been a framework that’s been established in our industry that is fair to the risk that industry takes to put a billion dollars into the ground. Keep in mind that billion dollars is what we spend when we start building the project. We’ve already spent a hundred million, completely at our risk, drilling holes in the ground, doing reservoir studies, de-risking our technology. For five years, all we’ve done is spent money.

“That risk comes with the execution stage. One of the things that’s needed is certainty around the royalty,” Edmondson said.

Edmondson said he was “extremely positive” that the federal grant will be made.

“This is a $225 million grant, and this is to go specifically for the SWA (South West Arkansas) project. Again, this is a $1.5 billion project. The $225 million grant will specifically go toward the central processing facility. That’s where we’re removing the lithium from the brine and converting it into a battery-quality material.

“This program started January 1. From all we know, our project is completely aligned with all of the executive orders. While there still might be some halting of grant funding, if you read the executive orders, which I've been paid to do by my boss, our interpretation of it is domestic critical mineral production, which lithium is considered a critical mineral, is absolutely a top priority for this administration.

“Oddly enough, critical mineral production is actually about the one thing that Democrats and Republicans seem to agree on. It's about the most bipartisan issue on Capitol Hill right now,” Edmondson said.

The need for lithium is about more than electric vehicles.

“It’s energy storage. It’s robots. It’s drones. You name it. Lithium is the future.

“It's the lightest metal. It has a very high energy density, and that means for anything portable -- electronics, leaf blowers, electric weed eaters, you name it, it’s lithium-ion batteries or it’s a lithium-based battery technology.

“The typical soldier in the field has 15 to 20 electronics, all of which are powered by a lithium-based battery. This is something that’s at the heart of national security,” Edmondson said.

Edmondson said the community can take pride in the fact that the nation’s first domestic production of lithium in 60 years will take place in Lafayette County.

To prepare, the companies are engaged with two- and four-year educational institutions to train the workforce the partnership will need before they start hiring in 2027.

“The main message I want to share with you is that a lot of these jobs do not require a college degree. There absolutely are jobs that will require a college degree, but there’s going to be jobs for high school education, GED – and we’re going to provide that training to make sure these opportunities are captured by the local community,” Edmondson said.

“There will be some talent imported – really experts from around the world -- but we’re focused on growing jobs within the community.”

The South West Arkansas Project is a joint venture, with 55 percent owned by Vancouver, Canada-based Standard Lithium, and 45 percent owned by Stavanger, Norway-based Equinor.

Allie Thurmond, Equinor’s vice president for U.S. Lithium, said the project’s formal name of “Standard Lithium-Equinor Direct Lithium Extraction Joint Venture” doesn’t roll off the tongue.

“We’ve rebranded to ‘Smackover Lithium.’ We want to demonstrate that we’re one team committed to delivering energy to people through the safe extraction of lithium, and progress for society through how we show up in your community,” she said.

Chad Martin, a Magnet Cove native who works for the joint venture, provided details about the project. He began by noting that only about 5 percent of the world’s lithium is produced through the direct lithium extraction process that Smackover Lithium will use.

More common but also more land-intensive production methods include using acids to strip lithium from rocks, or using vast ponds in which lithium is left behind after the water evaporates over 12-18 months.

Smackover Lithium will position five well pads supporting 14 supply wells, and 12 re-injection wells near the production facility. About 15 miles of pipeline will be built to pump brine to the plant, and then move the brine back to injection wells.

The plant site will be seven miles south of Lewisville along Arkansas 29.

Martin said the joint venture’s initial plan was to produce about 30,000 tons of lithium annually. This plan has since been modified to create two phases, with each phase bringing 22,500 tons of production online for total production of 45,000 tons annually.

About 500 workers will be involved in the construction phase, expected to start in early 2026 with completion by early 2028. Permanent employment will be about 100 to 120 people in the first phase, with another 20 to 30 added after completion of the second phase.

Smackover Lithium is remodeling a convenience store at the intersection of U.S. 82 and Arkansas 29 as its Lewisville office. A grand opening is expected in February.

Smackover Lithium may become the first large-scale lithium production facility in Southwest Arkansas, but it may not be alone and it may not even be the largest.

Tetra Technologies plans to build a bromine plant south of Stamps, which may also be capable of producing lithium. Smackover Lithium is leasing brine rights on thousands of acres from Tetra, which has held the leases for decades but never used them for production purposes.

Smackover Lithium officials said Wednesday that their company has no plans to lease any additional acreage in the region.

Albemarle Corporation plans a pilot lithium production facility at its Magnolia West facility. ExxonMobil is also investing into potential lithium extraction in the area.

Another energy giant, Occidental Petroleum, holds about 6,000 acres in Southwest Arkansas brine leases. Australia’s tiny Pantera Minerals has about 26,000 acres leased. Texas-based TerraVolta is also acquiring leases in Miller County, Arkansas, and in the northeast corner of Texas.

The U.S. Geological Survey, in a report issued last October, said between 5 and 19 million tons of lithium reserves are located beneath southwestern Arkansas. The report said that if the lithium is commercially recoverable, it would meet projected 2030 world demand for lithium in car batteries nine times over.

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