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Lithium producers in the US state of Arkansas are moving forward with their direct lithium extraction (DLE) projects despite current market challenges. They are bolstered by recent regulatory approvals and government support. Additionally, they benefit from experience in the oil and gas industry. This was according to panelists at the Fastmarkets Lithium Supply and Battery Raw Materials Conference 2025, which took place from June 23-26. They were discussing the state’s Smackover Formation and its role in forming US lithium and battery supply chains.
Saltwerx, a subsidiary of ExxonMobil, received approval for its 2.5% royalty rate from the Arkansas Oil and Gas Commission on June 23. This allows the company to move forward with its project in the region. This is according to Exxon’s lithium global business director Patrick Horwath.
The royalty rate is the same as the one set for the Smackover Lithium project, a joint venture between Standard Lithium and Equinor. This rate was similarly approved in the previous month.
The royalty rates for both projects will be based on the total amount of lithium produced. This will be pinned to the quarterly average of Fastmarkets’ assessment of the lithium carbonate 99% Li2CO3 min, technical and industrial grades, spot price ddp US and Canada.
The average for the second quarter of 2025 was $11.73 per kg at the midpoint. This was down from $11.93 per kg in the first quarter of 2025. The latest weekly assessment was $11.25-12.50 per kg on June 27, unchanged week on week.
Approval of Exxon’s royalty rate was the “last main regulatory step” needed before progressing with the project. It paves the way for the “hard yards of engineering studies and getting it investment ready,” Horwath said during the panel.
“Now it’s time for us to deliver our projects,” Standard Lithium CEO David Park said. He added that the company is now working on finalizing engineering studies and cost estimates. In addition, they are working on offtake agreements and project financing, following the royalty rate approval.
“We’re moving towards a year-end final investment decision and hoping to be in production by mid-2028,” Park added.
Depressed lithium prices have not changed the outlooks for the projects, according to Park.
“We’re focused on looking at long-term demand for lithium,” Park said. He added that they see robust demand for lithium in the 2028 timeframe and beyond.
“We’re focused on delivering a project and controlling what we can control,” Park added. “We’re ticking off milestones, derisking our project and moving it forward.”
“What we see in lithium today is unfortunate, but we take a multi-decade view on investment… The world needs a lot more lithium in the future than what it’s producing today,” Horwath said.
The upside of the current downturn in prices is that it will generate resilient lithium projects long-term. This is according to Equinor’s global head of lithium, Lisa Rebora.
“We’re constantly working on optimizing the flow sheet and technology,” Rebora said. She added that the JV stakeholders behind Smackover Lithium have remained focused on factors they can control. This includes reducing costs, choosing which regulatory environments to operate in, and establishing partnerships to share risks and rewards.
The JV is complementary and resilient because Standard Lithium is a strong technology partner. Additionally, Equinor has robust subsurface experience, given its history in the oil and gas sector, according to Rebora.
For instance, subsurface experience has also helped Exxon set standards for days drilling to get to target depths. On the chemicals processing side, understanding how brine moves through columns unlocks additional capacity, according to Horwath.
“There are some really transferrable skills from oil and gas. It’s really the reason that we got into this in the first place,” Horwath said.
Although Direct Lithium Extraction (DLE) producers in the Smackover Formation are competitors in some ways, there are opportunities to collaborate. This would promote the region in general, according to the panelists.
“The Smackover is competing versus all of the resources around the planet…” Horwath said. “And when you look at jurisdictions around the world, there are some pretty big ones that are outcompeting the US right now.”
“It’s on all of us and the government here to build out this domestic supply chain,” Horwath added. He highlighted a current lack of investment in US battery supply chains’ midstream processing capabilities, especially cathode capacity.
“We’re certainly working to attract any and all battery manufacturers to the state,” Arkansas Commerce Secretary Hugh McDonald said. “We hope that the fact that [lithium] is being produced and refined in the state, we can further add midstream and downstream opportunities from an economic development perspective.”
For example, the Arkansas legislature recently has supported economic tax incentives for further development of the lithium sector. They have invested in the workforce in collaboration with lithium producers in the state. This is according to McDonald. He added that the government is also currently building out an ecosystem for entrepreneurs in the lithium sector via an “accelerator”.
“Innovation is key for furthering developing the midstream in this industry. Anything we can help do to further that, we want to be involved in,” McDonald said.
Arkansas Lithium Innovation Hub will host its second year of the Arkansas Lithium Innovation Summit on Oct 28-29 in Little Rock. Market participants at the conference in 2024 discussed key topics for the industry. These included the Inflation Reduction Act, EV outlooks, and market share between lithium iron phosphate and nickel manganese cobalt batteries.
Chevron’s recent acquisition of two leases in the Smackover Formation also further validates opportunities in the state. This will help build out lithium supply chains, according to McDonald.
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