Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 14, 2024 at 13:54

Sulphur Springs is the county seat of Hopkins.  Nowhere near San Augustine.  It's the county due west of Franklin County on the map.

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Permalink Reply by Skip Peel - Mineral Consultant on March 15, 2024 at 4:39

Is Lithium headed for a commodity bubble?  Will a surge in production create downward price pressure?  Will DLE prove to be the lowest cost production method?

Why the EV Industry Can Count on Relatively Cheaper Lithium

Prices are expected to rise this year, but likely will remain well below their 2022 peak.

By Kwasi Ampofo  March 15, 2024 bloomberg.com

Price Relief Should Stick

The cure for high prices is higher prices. But the cure for low prices is not always lower prices.

Consider the price of lithium, the indispensable battery metal that’s showing signs of recovery after reaching a rock bottom of $13,200 per metric ton at the end of February, the lowest in three years. Prices have risen by 12% since.

The allure of higher prices attracted a wave of new producers, from Zimbabwe to China, in 2022. Their coming online has coincided with a slowdown in the demand for the battery metal, leading to a market surplus. In 2023, the demand for lithium carbonate from battery producers was 617,000 tons. Producers, on the other hand, churned out 705,000 tons of the metal over the same period.

Prices are likely to rise this year, but are expected to remain far from their 2022 peak.

Three things will drive the marginal recovery.

First, the astronomical rise in prices meant that historically unviable sources of lithium, such as lepidolites, became commercially viable. Lepidolite, a type of lithium ore, contributed about 5% of mined supply in 2023, according to BNEF analysis.

This year, its growth is at the risk of a slowdown. Lepidolite has a higher cash cost due to the more complicated nature of extracting lithium from the ore. Lepidolite producers are already occupying the upper end of the cost curve.

Secondly, supply risks in China could emerge in the wake of the environment ministry’s warning to the sector late last month about lax environmental enforcement in Qinghai, the country’s lithium hub. The crackdown on waste-management practices in the province’s brine operations already has unnerved the market, Bloomberg News reported. Stricter environmental enforcement on producers could lower anticipated supply of lithium from the region this year.

Thirdly, the fall in battery-metal prices has led to a corresponding drop in the price of electric vehicles, due to cheaper batteries. Some automakers, including Tesla and BYD, have passed on these cost savings to consumers to drive up sales. This should lead to demand growth for lithium, which will help narrow the surplus gap and offer support to recovering prices.

Lithium-Ion Batteries Set to Get Cheaper

Prices expected to keep falling after inflation-induced blip in 2022

Despite these interventions narrowing the surplus gap in 2024, the market won’t return to its severe deficit recorded in 2022 anytime soon, due to the prospects of upcoming technologies such as the direct lithium extraction, or DLE.

DLE aims to extract lithium from brine more efficiently. Last year, about 48% of lithium supply came from brine resources, which are located in Chile, Argentina and Bolivia.

The evaporation method typically used on brine relies on solar evaporation to concentrate the lithium. The process could take up to two years, with a recovery rate of 40% to 60%.

Direct lithium extraction technology promises to solve the low yield and long production time problems, with many DLE technologies claiming a 90% recovery rate and two weeks of lead time to produce the lithium concentrates.

Most DLE projects are currently in the pilot phase, however companies such as Albemarle and Arcadium Lithium are hoping to commercialize their technologies late this year and in 2025.

An improvement in lithium recoveries and shorter processing time will increase supply in a market already in surplus, thereby prolonging the long-term recovery of prices.

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Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2024 at 12:45

I am concerned about the lack of on the ground intel on brine leasing from members.  For me this is eerily reminiscent of the Haynesville Shale leasing pre-official announcement by Aubrey McClendon in the Spring of 2008.  By that I mean leasing is flying under the radar and leaving far too many land/mineral owners in the dark.  Encana and Chesapeake started forming Haynesville drilling units and drilling test wells as early as 2006 but no one seemed to be the wiser until Aubrey spilled the beans.  The data was there for anyone who wished to use the fabulous tool that is SONRIS, the Louisiana state O&G database.  I came along in 2008 just days before that announcement and out of curiosity did some research to see what could have been known in those two years leading up to the play.  I wrote a blog on it.  I'll post a link below. 

The upshot of that two years flying below the radar is that mineral owners with significant acreage in prospective locations accepted leases that were far below what turned out to be the fair market terms for a Haynesville Shale lease.  Those folks lost millions of dollars owing to low bonus and royalty terms.  In their defense, they didn't know.  This was before you could do an internet search and find reliable information like you find here.  Kudos to Keith and Anna for starting this website.  Knowledge is power.  And without knowledge, mineral owners are in the dark.  Please recruit friends, family and neighbors to share the facts about brine leasing.  We don't wish to be caught unawares this time around.

https://gohaynesvilleshale.com/profiles/blogs/chronology-of-the-early

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Permalink Reply by Skip Peel - Mineral Consultant on March 19, 2024 at 6:50

Exxon video on brine processing for DLE.

Sneak preview: our new lithium business

exxonmobil.com

Key takeaways:

• New video highlights our lithium plan in Arkansas
• We'll look to tap brine deep underground, produce lithium above ground
• Less environmental impact than current methods

https://corporate.exxonmobil.com/what-we-do/delivering-industrial-s...

Want to visualize what our new lithium business might look like?

Check out this two-minute animated video about our plan in southwest Arkansas. 

This video “debuted” at the recent Lithium Innovation Summit in Little Rock. We’re sharing it to help promote a broader understanding of how we plan to deliver more lithium for electric vehicles, with less environmental impact than current methods.

Some of this work is already underway. We can work fast because the skills and technologies needed to produce lithium from deep brines (like those in Arkansas) are very similar to ones we’ve honed over decades in our oil and gas business. Production is targeted to begin in 2027.

Animations in this video are for illustration purposes only.

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Permalink Reply by Skip Peel - Mineral Consultant on March 25, 2024 at 3:02

America's lithium laws fail to keep pace with rapid development

By Ernest Scheyder March 25, 2024  reuters.com

 

March 25 (Reuters) - Washington's drive to make the United States a major global lithium producer is being held back by a confusing mix of state regulations that are deterring developers and hampering efforts to break China's control of the critical minerals sector.

Across Texas, Louisiana and other mineral-rich states, it's unclear who owns the millions of metric tons of lithium locked in salty brines underneath U.S. soils, how the battery metal should be valued by regulators and who ultimately should pay to process it into a form usable by manufacturers.

 

These legal ambiguities are the latest impediment - alongside technical challenges and sagging commodity prices - to America's plans to produce more of its own lithium and wean the country off foreign supplies, according to interviews with regulators from seven U.S. states, legal experts, politicians, landowners, investors, royalty firms, industry executives and consultants.

U.S. federal officials in Washington are largely powerless to force states to change regulations, leaving the Biden administration's aggressive electrification targets beholden to the pace at which local officials update outdated statutes.

 

Global lithium demand is expected to outpace supply by 500,000 metric tons annually by 2030. Unless the United States boosts its own production, the country's manufacturers will find themselves reliant on China and others for supply as the end of the decade approaches, analysts warn.

 

The Texas legislature, for example, last year approved a law - supported by Standard Lithium and Chevron - that instructed the state's oilfield regulator to craft regulations for lithium extraction from brines. But the regulator, known as the Railroad Commission of Texas, told Reuters is has no timeline for when it will finish that task.

 

"I don't even know where to start in terms of working with the local authorities to get brine mineral rights in Texas. It's confusing," said Brady Murphy, CEO of Tetra Technologies, which aims to produce lithium with partner Exxon Mobil.

 

The Railroad Commission of Texas told Reuters it plans to release its rules for public comment once they are formulated, and then the three commissioners will vote on them.

 

While the 1972 U.S. Clean Water Act gives Washington regulatory power over water extraction and reinjection across the country, state officials have autonomy to govern other parts of the process.

 

Tetra, which also produces chemicals for water treatment and recycling, has tested more than 200 brine samples from Texas, but so far has opted not to do business in the Lone Star State due to legal uncertainty, Murphy said.

Koch Industries-backed Standard Lithium said last October it had drilled a Texas brine well with lithium concentrations nearly as high as those found in parts of Chile, which has the world's largest lithium reserves. But Standard can't touch that lithium until regulations are set.

"We're taking a measured approach to Texas," said Robert Mintak, Standard's CEO.

REGULATORY RISKS

In Oklahoma, which has several brine deposits, the Oklahoma Corporation Commission - which oversees oil and gas development - said it has no jurisdiction over lithium production and royalties, and referred comment to the state's Department of Mines, which said it also does not oversee lithium.

 

In Utah, the state legislature and governor approved a bill last year aimed at preventing water levels from dropping in the lithium-rich Great Salt Lake. That led Compass Minerals to abandon plans last month to produce lithium for Ford in the imperiled lake and disband its entire lithium team, saying "regulatory risks have increased significantly around this project."

 

And in Louisiana, the lack of state guidelines is fueling concerns from legal experts that producers could trespass on neighboring land when they reinject brine after filtering out lithium. Reinjection is a key step to preserve underground water table levels.

 

"There'll likely need to be a court fight about whether they have the right to do that," said Keith Hall, director of the Louisiana State University's Mineral Law Institute.

 

The Louisiana Department of Energy and Natural Resources told Reuters it does not have existing statutes related to lithium.

 

The path is even murkier for water that is extracted alongside crude oil. Oil companies for decades have paid to dispose of that produced water, which contains lithium that could be sold for a profit.

 

With lithium demand now on the rise, landowners, oil producers, and companies that oversee water disposal are tussling over ownership.

 

A Texas state appeals court last year ruled that COG Operating controls such water that it extracts alongside crude oil, but the ruling only applied to that specific case. And not all oilfield leases include clauses for who owns other minerals extracted alongside oil, sparking questions as to whether lithium is covered by existing leases or if companies need to negotiate new contracts with landowners.

 

"That is going to have a chilling effect on capital investments until it's resolved," said Jamie Rhymes, an attorney specializing in minerals contracts at the Liskow & Lewis law firm.

ARKANSAS

Legal experts told Reuters that it's unclear how lithium will be valued for royalty payouts given the cost for equipment to filter the battery metal from brine, which unlike oil typically has no market value itself.

 

In Arkansas, where Tetra, Exxon, Albemarle and Standard Lithium hope to produce the battery metal within a few years, state officials have been debating a royalty structure to compensate landowners since 2018.

 

Shane Khoury, who oversees the body that will set the royalty rate in his role as secretary of the Arkansas Department of Energy and Environment, said the state may charge different rates depending how much lithium is in a brine deposit.

 

Albemarle, the world's largest lithium producer with operations in the United States, Chile, Australia, China and elsewhere, plans to open a pilot facility in Arkansas by the end of the year and said it has chosen not to - for now - submit a royalty proposal while it watches Standard's royalty review process.

 

"We're waiting to see how (the Arkansas royalty situation) evolves," said Netha Johnson, the Albemarle executive overseeing the company's Arkansas lithium project. "There's a couple of fundamental differences between the way that brine royalties could be calculated."

 

Exxon also has not submitted a royalty proposal despite spending more than $100 million in Arkansas and on a Houston test facility as part of an aggressive move into lithium, but said it hopes the state's royalty will be uniform across the state.

 

California, which has giant lithium reserves in its Salton Sea region east of Los Angeles, last year imposed a flat-rate tax for each metric ton of lithium. The move has pushed back development of projects slated to supply General Motors and Stellantis. California's governor and legislators have defended the tax as a necessary way to ensure all residents benefit from the energy transition.

 

Nevada, which has the only commercial U.S. lithium operation - a small mine operated by Albemarle - has taxed minerals for more than 100 years, but at a rate based on each facility's revenue.

 

Industry analysts expect regulations to be eventually set in various states, but predicting when is anyone's guess.

 

"The uncertainty is the scariest part," said the owner of lithium-rich acreage across several states who declined to be named so as not to offend regulators. "How do you develop these projects and muster financial support without a regulatory structure in place?"

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Permalink Reply by Joe B. Lovelace on March 25, 2024 at 6:02

Thank you Skip for posting this article.  It is accurate as to Texas in which case law and regulatory rules are unsettled. 

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Permalink Reply by Skip Peel - Mineral Consultant on March 25, 2024 at 13:48

You're welcome, Joe.  I agree with the article that uncertainty as to regulatory statutes and legal questions are a drag on the pace of development but disagree that the current price and the "technical challenges" are an impediment.  All the companies targeting DLE from brine are years away from full scale production and increasing demand for lithium will undoubtedly create a greater future price.  Although extraction technologies are proprietary and no company wishes to be too specific as to process, more than a few have reported 95 to 98% recovery of lithium from their brine tests.  There may be some tweaks to the processes but it appears clear that DLE works and that the focus now is how to scale production.

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Permalink Reply by Skip Peel - Mineral Consultant on March 31, 2024 at 3:59

The following is an excerpt from a lengthy, in depth article by the Jackson Walker law firm that covers the legal nuances of Texas mineral law and how it relates to "produced water" and the extraction of lithium.  There is still much to be determined as to regulations and coming case law.  Stay tuned.

For the article in its entirety, clink this link:  https://www.jw.com/news/texas-produced-water-ownership/

Texas Ownership of Produced Water and Its Constituent Parts (Lithium)

March 29, 2024 | Insights jw.com

By Peter E. Hosey, Reagan M. Marble, Robert M. Biedrzycki, Brandon Durrett, and Brenda Eckert

CONCLUSION

How landowners and operators respond to these changes depends upon terms of their underlying oil and gas leases. If currently bound by a lease the lease terms will govern as HB 3246 provides a carve-out allowing a contractual provision to override the statutory provision. This carve-out would also affect surface use agreements which contain the relevant water terms. Alternatively, operators and surface owners alike may consider entering new leases which add language affording them the right, but not the obligation, to take the produced water in kind for their purposes. Either way, produced water’s ongoing transformation from liability to asset is certain to create more and more litigation until the constitutionality of HB 2767 and HB 3246 is determined.

While mineral extraction from brine has existed for many years, the law in Texas on the matter is still in its infancy. Texas case law provides clues about the ownership of lithium as extracted from brine and the rights of the surface owner, but investment in the industry would benefit from settling those matters under the law. Rather than waiting on development of case law, which could take a long time and may not produce clear answers, Texas may consider a legislative solution addressing these issues. But in the meantime, ask us our opinion on who owns the lithium in brine in Texas… we can “li” to you.

Since Jackson Walker’s founding in 1887, our attorneys have represented some of the most influential companies and business leaders in the world. Today, we remain firmly rooted in Texas while serving clients around the globe. With more than 500 attorneys, we are the largest firm in Texas and have been recognized by Law360 as a “Texas Powerhouse” and an “elite law firm” that regularly provides counsel to industry-leading clients on highly complex transactions ranging from millions to billions. To explore our related experience, visit the Energy practice page.

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Permalink Reply by Skip Peel - Mineral Consultant on March 31, 2024 at 13:38

Law firms, especially those with the relevant practices, are positioning themselves for a hoped for surge in clients.  Most I suspect will want to work with the industry/business stakeholders.

Permalink Reply by Skip Peel - Mineral Consultant on April 3, 2024 at 5:35

Standard Lithium: The Ridiculous Potential Of Texas

Apr. 03, 2024  Austin Craig  seekingalpha.co

 

The following is an excerpt from the article.  To view it in full with graphics, use this link:  https://seekingalpha.com/article/4681812-standard-lithium-ridiculou...

Summary

• Standard Lithium has intriguing lithium properties in Arkansas and Texas.
• LAC just received a $2.26 billion dollar loan from the US Government. SLI could be next.
• Powerhouse Exxon acquired a property for $100 million directly across from Standard Lithium.
• The Texas Lithium property is a gem, with lithium brine grades that average 644 mg/l.

Lithium's Demise is Premature

Reading the headlines, one might glean that lithium batteries are kaput and were just a fad. While some companies are indeed slowing down concerning EV timelines, others like Tesla (TSLA) are working on producing a $25,000 automobile. The reality though, is capital is still flowing into large EV production facilities from car makers, battery production facilities, and lithium mining projects. Not to mention the Federal government just moved a step closer to giving Lithium Americas (LAC) a $2.26 billion dollar loan. Hence, investors might be wise to take notice and follow the money.

While many excellent lithium companies exist in both Argentina and Nevada, today let's consider a rather unique lithium play in Arkansas, namely Standard Lithium (NYSE:SLI).

This should interest you as powerhouse Exxon (XOM) just purchased mineral rights next door to SLI for a mere $100 million. Again, Lithium Americas just snagged an utterly mindboggling amount of government funding at a mere $2.26 billion. The nay-sayers can murmur about lithium's demise all they like, but the harsh reality is the U.S. government is waking from its slumber regarding critical elements independence from China and are moving forward. A $2.26 billion loan to LAC does wonders to show other lithium companies and investors the path to production, whilst giving weight to validating clay-based lithium extraction. Digressions aside, let us begin exploring Standard Lithium.

Locking In Supply Of Lithium

Some time ago news of General Motors (GM) investing in Lithium Americas arrived. This effectively locked out all other carmakers from LAC. The importance of this and the impact cannot be easily put into words. It changes the entire ecosystem. It is a call to an economic supply war among car makers. Some car producers will realize this; they will adapt and invest in lithium companies or secure off-take agreements. Others will ignore this competitive advantage that rivals will enjoy and instead suffer the consequences of being at the mercy of lithium market prices.

Before this development, the automotive makers all avoided entering into direct investments, but GM just started a hot economic fight. Car makers could be forced to marry into projects to secure supply and the associated discounted prices.

Remember, mines on average take 10+ years to go from exploration to pulling pay dirt out of the ground. Yet, Standard Lithium has a few unique advantages that could ramp things up. They are not located on BLM land. Hence, they do not need permission from the BLM. Also, they are co-located on a pre-existing industrial operation which could speed up timelines when it comes to permitting issues.

The Standard Lithium Projects

The Standard Lithium plan is simple: Take a phased approach and build out a commercial plant to prove that the KOCH-SLI joint venture DLE extraction technology works. Then keep expanding.

Standard Lithium has four projects. Two are located in Arkansas (The first is a three stage Lanxess project and the second project is called the "South-West Arkansas Project"). Then you have the Texas Lithium project and lastly the California project called "Bristol Lake".

For this article, we will be concentrating on Arkansas and Texas, as California seems rather dormant. Let's look at the projects. First, an overview of the Smackover formation that SLI plans on operating in. As you can see in the graphic below the Smackover formation in gray extends from Texas to Florida. Standard Lithium's focus is Arkansas and Texas (for now) but they could expand inside the Smackover formation. Let's look at Arkansas first.

Looking at Arkansas, we can see the first phase is the multi-stage "Lanexx 1A project" as seen below on the right. This project has three phases with phase 1 targeting production in 2026. The South West Arkansas project on the left of the graphic is the second main project.

The SLI Lanxess project will be constructed in three phases. This reduces capex costs but more importantly the intent is to prove to the market that the KOCH-SLI DLE technology works at commercial scale. During phase 1 the project will weigh in at a Capex cost of $365 million to build the plant; the output of lithium will be 5,400 tonnes per year per the DFS. Opex cost per ton comes in at $6,810. SLI's after tax NPV is $550 million at an 8% discount rate and lithium selling price at $30,000 over the mine life. Lithium grade is 217 mg/l. Now 217 mg/l is not incredible, but SLI will be tapping into the back end of an existing operation. Thus, no wells have to be drilled which lowers expenses and speeds up permitting as it will be co-located on a preexisting bromine operation. Below we can see the pre-existing Lanxess operation along with the SLI pilot plant in red.

A lithium grade of 217 mg/l is decent enough to get the ball rolling. For comparison Albemarle's (ALB) Silver Peak operation sports grades of 123 mg/l while the Salton Sea has grades of 204 mg/l.

While the lithium output of SLI is not tremendous at 5,400 tonnes, nor is the project costs compared to some of the larger projects. Even with some inflation we might estimate the project cost has grown to $400 million. Still peanuts compared to LAC's Thacker Pass capex of $2.93 billion for 40,000 tonnes of output (phase 1). Granted this is not an apples-to-apples comparison. Each project has a different mine life, a different medium they are working with, etc. The point is if you want to dip your toe into a massive project you can do it in phases with SLI. This allows you to test the waters at a smaller level. Once the project is proven at scale you go for the prize which is Texas but first, let's take a closer at the 2nd main project of Standard Lithium.

The South West Arkansas Lithium Project

As we can see in the below graphic, the lithium grades continue to improve the further we move from the Lanxess project (217 mg/l lithium) and travel eastward. As we near the second project we start to encounter lithium grades that average of 437 mg/l.

The key takeaway to remember is Standard Lithium has plenty of expansion plans in Arkansas that total to 48,600 to 53,600 tonnes of lithium if they build out all of the current plans for Arkansas. Note the key words -- current plans. The Smackover formation is quite large and ripe for expansion given some longer time frames. Note all the pre-existing wells in lower Mississippi to Florida.

New expansions in the Smackover could happen but let's look at Standard Lithium's gem, the Texas project. They say things are bigger in Texas. Lithium grades of lithium certainly are.

Texas Is The Lithium Gem

So why go through all the trouble to build out Arkansas? Well, again, it is to prove the KOCH-SLI DLE process works at a larger commercial scale. Remember the Lanxess project sports 217 mg/l and South West Arkansas has 437 mg/l but then enter the East Texas project at 644 mg/l. That is the highest brine grade in North America according to SLI and Standard places the potential project size at 100,000+ tonnes per year.

 

The SLI Texas Project (SLI)

This high grade of lithium in Texas should translate into lower capital and lower operating expenses. The NPV (net present value) of this Texas property could be impressive. However, we will have to wait for a study to confirm that. Yet, Texas is the gem of the projects. Additionally, Texas has bromine (that ALB mines in Arkansas) along with potash. These could be very attractive to ALB as they are already producing Bromine in Arkansas.

 

Local Lithium Demand

Tesla is building out a lithium refinery on the Texas gulf coast (noted by the red X in the graphic below) to feed its car production facility in Texas. This car plant will require lithium and with the close geographic proximity to SLI it stands to reason that Tesla could buy lithium from SLI. Do note all of the potential lithium demand below.

Exxon Joins the Lithium Fray

One final thing to ponder is the energy powerhouse Exxon acquired a rather large block of mineral rights (120,000 acres/187.5 square miles or 485.6 square k/m) for $100 million smack next to Standard Lithium. In the graphic below it is on the bottom right in a darker blue listed as the Galvanic property. Also take note that Albemarle is next door too. Two massive companies each next door could prove to be interesting.

Given the excellent water, transportation, and energy infrastructure (along with lithium mg/l values) I was not too terribly surprised that Exxon moved quickly. It is a very nice confirmation of Standards project potential when a giant moves in next store. Exxon has plans to drill the property and they are currently hiring for DLE lithium positions with first production targeted at 2027.

Additionally, Standard and Exxon also have Arkansas state Governor support from Sarah Sanders:

“South Arkansas is our state’s all-around energy capital, producing oil, natural gas, and now, thanks to investments like ExxonMobil’s and their combination of skills and scale, lithium,” said Arkansas Governor Sarah Huckabee Sanders. “My administration supports an all-of-the-above energy strategy that guarantees good, high-paying jobs for Arkansas – and we’ll continue to cut taxes and slash red tape to make that happen.”

Risk

Standard is a penny stock and has limited capital ($21.5 million CDN as of December 31, 2023). Granted, KOCH is in bed with the company having acquired a little over 7% of the stock some time back. Yet capital is not infinite. They will require a partner or partnerships to push this from story to reality. However, with today's news that Lithium Americas received $2.26 billion from the U.S. government to develop its lithium mine "Thacker Pass" in Nevada, this bodes well that Standard Lithium could also receive a loan that would allow them to fund most of the projects. Yet again, the company has limited capital. They have a burn rate and Mr. Murphy is always on the prowl. For investors, opportunity cost is also a factor.

To invest in Standard Lithium, you could be in for a very long wait that might take several years, if not more, to fully pan out. I think the risk to reward is worth the wait, but this requires an investor mentality as opposed to a trader mentality of chasing whatever is the hotness of the week.

Conclusion

For the patient investor, who is not risk adverse and willing to conduct due diligence, I view SLI as an intriguing value play. The size of the resource is large. Ample infrastructure exists to include water, rail, and power. Exxon moving next door validates the land, and lastly, Lithium Americas receiving a $2.26 billion loan for a lithium mine shows investors the way from concept to building out a project. The Texas project has very good grades of lithium and Arkansas is pretty good as well. At a buck and change I am buying, and I can afford to wait for these seeds to germinate and grow.

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Permalink Reply by Skip Peel - Mineral Consultant on April 8, 2024 at 3:07

New player enters East Texas lithium race, targets Franklin County

• Samuel Shaw  news-journal.com

The sprint to lease Northeast Texas land above the lithium rich Smackover Formation is heating up.

Black Mountain Lithium, a subsidiary of Fort Worth-based Black Mountain, has joined Canadian company Standard Lithium in the hunt for the sought-after mineral that powers almost all modern batteries. 

In 2023, Standard reported finding the purist lithium brine samples in North America below Cass and Franklin counties. Black Mountain appears to be focusing its leasing and lobbying efforts on Franklin County — a rural area between Sulphur Springs and Mount Pleasant — where local opposition to renewable energy projects also has flared.

Black Mountain is new to the lithium industry and even newer to East Texas. The company’s largest projects are in upstream oil and gas with another subsidiary focusing on battery energy storage. Black Mountain Lithium was incorporated in January.

The company appeared to begin soliciting Franklin County landowners for their lithium brine around December, according to mineral lease contracts obtained by the News-Journal.

By January, Black Mountain approached Mayor Brad Hyman of Mount Vernon, the largest town in Franklin County, to organize a town hall meeting where residents could learn more about brine mining and the company’s vision for the area. A date for that meeting has not been finalized.

Black Mountain declined multiple requests for comment, and little of the company’s plan for East Texas lithium is available in the public domain.

However, Black Mountain CEO Rhett Bennett acknowledged his interest in lithium mining more than a year ago in a LinkedIn post. The post displayed a graph of underinvestment in battery metal extraction with the above caption reading: “Looks like prolific times ahead for the Miners.”

Residents want transparency

Standard Lithium began hunting for leases in Franklin County before Black Mountain, and the Canadian firm’s secretive approach to doing business troubled some local residents who fear the environmental consequences of lithium extraction.

“I haven’t heard from anybody at Standard Lithium at all,” Hyman said.

Black Mountain’s overtures to the community were a welcome change to what Hyman described as an opaque industry that’s left his community in the dark.

“Black Mountain reached out to us inquiring about the city’s minerals,” Hyman said. “They mentioned they wanted to do a town hall, too, and I think that’s a great idea.”

“Come share with the community what it is that you're doing. Maybe it'll dispel some of the fears that people have around the unknown of what lithium extraction looks like,” Hyman said.

A group of Mount Vernon residents have organized against large solar farms and municipal scale battery storage projects proposed for Franklin County.

Lithium is an essential ingredient for the batteries that store solar energy, and each of the industries — solar, batteries and lithium — have come under fire from Mount Vernon activists for what they say is a lack of communication.

Hyman sees merit in those concerns.

“With these energy companies, the solar stuff going on, companies will talk about how good they are, that they’ll be partners with your community,” he said. “Yet they don't have the time to actually walk through the front door of City Hall and say, ‘Hey, here's who we are and what we're wanting to do.’ ”

The Mount Vernon mayor said the town was not prepared to sign a deal for the city’s minerals as actual lithium production is thought to be five to seven years out. Still, Hyman said, “we are not against lithium — we just need to know more.”

He cautioned private landowners against signing leases so far ahead of anticipated production.

Hyman also noted one other key difference between Standard Lithium and Black Mountain: the Fort Worth-based company seems to be prioritizing mineral leases that include lithium and oil and gas, allowing Black Mountain to pivot depending on what’s found while drilling.

“But right now, we want to understand more about the industry and its environmental impacts,” Hyman said.

Earlier this year, lithium companies operating in East Texas as well as a hydrogeologist familiar with the lithium mining technology told the News-Journal that Direct Lithium Extraction is the lowest-impact method of mining.

The Nature Conservancy, a leading environmental advocacy group, shared that assessment. Direct Lithium Extraction has the same footprint as a fracking well but requires fewer wells that are drilled less often.

Samuel Shaw is a Report for America corps member for the News-Journal, covering East Texas’ rural to urban transformation. Reach him at sshaw@news-journal.com.

For three years, a Canadian mining company called Standard Lithium operated in near-total secrecy, setting up shell companies, securing mineral leases across Northeast Texas and drilling wells to sample an underground ocean of brine called the Smackover Formation. Ten thousand feet beneath Cass County, the company found what it was looking for in the salty mixture — lithium, the key mineral for most electric batteries and an emerging centerpiece to global green energy plans.

The lithium sweet spot in Texas

In Northeast Texas, lithium is found in brine (essentially salt water) that’s roughly 10,000 feet underground. The formation containing that brine is called the Smackover Formation and cuts a narrow path from western Florida, up toward Southwest Arkansas, before streaking down through Northeast Texas. 

Companies operating in the Smackover are proposing a technology similar to fracking called Direct Lithium Extraction that sucks the brine from below and refines it into battery-grade lithium at above-ground processing sites.

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Permalink Reply by Lisa on April 22, 2024 at 9:20

This might have already been asked and discussed, but am I right that as a Franklin County land owner, I should continue to patiently wait for the dust to stir and then settle regarding future lithium/brine leases? Is it likely that the day will come when an offer similar to an oil and gas lease will happen— per-acre fee plus royalties tied to amount of substance taken along with its going rate? I try to pay attention but it’s hard to know where to check in.

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