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$365M Lithium Plant Plans Move Ahead for El Dorado

4 min read

Standard Lithium Ltd. announced it’s forging ahead with plans for Arkansas’ first commercial lithium production facility, releasing positive results Wednesday from a definitive feasibility study for a $365 million battery-grade lithium operation just outside El Dorado.

The Vancouver-based company has been producing battery-quality lithium carbonate at a demonstration facility at the Lanxess South plant near El Dorado for three years, and Wednesday’s announcement predicted commercial production will start in 2026, with Standard using direct lithium extraction methods to pull the element from Smackover Formation brine that has for years been mined for bromine by Lanxess, the German multinational chemical company.

The feasibility study foresees average annual production of 5,400 tons of lithium carbonate over at least 25 years, and strong economics: an internal rate of return of 24% assuming a discount rate of 8% and a long-term price of $30,000 per ton for the battery-making ingredient

The study projected a $365 million capital expenditure to build the plant, which includes a 15% allowance for contingency costs.

Standard is planning an even bigger $1.27 billion commercial lithium plant west of Magnolia, and a definitive feasibility study is pending on that project, which could create as much as 30,000 tons of lithium chemicals per year.

But the plant planned in conjunction with Lanxess, which Standard calls its 1A project, would be a major domestic player in lithium if it comes to pass. “The United States now produces less than 5,000 tons of lithium chemicals a year,” Standard CEO Robert Mintak told Arkansas Business. “Domestic requirements for lithium chemicals are projected to be approximately 700,000 tons per year by the end of this decade.”

Along with Lanxess, Standard has partnered with Koch Industries of Wichita, Kansas, the second largest privately held company in the United States, and with Tetra Technologies of The Woodlands, Texas.

The 1A project takes advantage of Lanxess’ existing infrastructure, including three brine-processing facilities, 200 miles of pipelines and 64 brine production and reinjection wells capable of processing 4 billion gallons of brine per year. Standard’s process, which uses its own extraction technology and another process developed by Koch Industries entities, directly obtains lithium from the saltwater pumped up from thousands of feet below southern Arkansas, then pumps the brine even deeper back into the ground. Most contemporary lithium miners pull up the brine and evaporate it in vast ponds, concentrating the lithium as the water dries up.

“This is considered an unconventional brine resource because it requires modern processing, direct lithium extraction, to unlock it,” Mintak said. It is more environmentally friendly than the “evaporation ponds that you see in Chile or Argentina, or to a smaller extent in southern Nevada.”

After starting its Arkansas projects with just a handful of employees six years ago, Mintak said, Standard now has “well north of 100 people” working on them, including consultants.

Andy Robinson, Standard’s president and COO, said in a news release that the company is taking a thoughtful and phased approach to building a lithium industry in Arkansas.

“Phase 1A is the first commercial lithium extraction plant proposed for the Smackover, and a modest scale up from the Demonstration Plant that has been operating and efficiently extracting lithium from the same brine for over 3½ years,” he said. “The Phase 1A Project is substantially de-risked as we move rapidly towards commercialization.”

Mintak said Phase 1A taps into established expertise in brine processing, “complemented by the infrastructure at the LANXESS South Plant,” adding that it also “marks the beginning of a series of lithium projects we’ve charted across the Smackover Formation, a region that’s been integral to the U.S. energy sector for over a century.”

The company is finalizing commercial agreements with Lanxess and securing project financing with the help of BNP Paribas of Paris, a global leader in project financing, in which the cash flows and physical dimensions of major projects, particularly in energy, serve as security against debt.

“We’re also actively exploring opportunities within the U.S. Critical Minerals Initiatives and Inflation Reduction Act, focusing on non-dilutive funding solutions to advance our goals,” Mintak said. Standard hopes to make a final investment decision on the El Dorado plant in the first half of next year, and assuming that the answer is yes, to start construction by the end of 2024.

Standard, Lanxess, Albemarle of Charlotte, North Carolina, and Exxon Mobil are all investing in mineral leases and lithium exploration in the region. Lanxess’ head start and its affiliation with Lanxess and Koch Industries puts it in the “pole position,” Mintak said in an interview.

The company’s all-in capital estimate of $365 million for the 1A plant takes into account efforts to de-risk the construction process. It has nominated an engineering, procurement and construction contractor, Optimized Process Designs LLC of Katy, Texas, a subsidiary of Koch Industries. OPD has set out construction performance and schedule guarantees, as well as guarantees about the production of battery-quality lithium carbonate at the facility’s design capacity, the company said in a news release.

All-in operating costs including capital expenditures and assumed brine fees, the company said, are estimated at $7,390 per ton of lithium carbonate.

Standard’s timeline is subject to ongoing engineering, its finalization of commercial agreements, and approvals from the Arkansas Oil and Gas Commission.

“Currently, there are no material, federal permits or authorizations required. Permit development activities for the State of Arkansas construction and operating permits are ongoing and on-schedule for completion ahead of required timelines to support the construction and commissioning of Phase 1A,” the company release said.

The feasibility study included several companies and independent contractors, including RESPEC, a geoscience engineering and data company; William M. Cobb & Associates of Dallas, an engineering and geological services firm; Alliance Technical Group of Decatur, Alabama, which also has a core location in Bryant; Hunt, Guillot & Associates, an engineering and project management group in Ruston, Louisiana; and independent consulting metallurgical engine Mike Rockandel.

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