A Gusher for an Era of EVs?

Inside one of two of Standard Lithium Ltd.'s demonstration plants in El Dorado, which started producing lithium products in May 2020. (Madison Ogle)

Magnolia Mayor Parnell Vann, once an oil worker, knows well the riches that flow under south Arkansas, and how fast their potential can fade.

“I worked in the oil fields as a kid, and I’ve seen the boom and the bust,” he said this month. “And I think this thing is bigger than the boom.”

“This thing” is the birth of an industry that energy companies hope will produce gushers of lithium for battery-making in the booming electric vehicle market.

Standard Lithium Ltd. of Vancouver and chemical makers Lanxess and Albemarle are working to draw lithium from the subterranean brine of the Smackover Formation, which runs for much of its 600-mile length along the border of Arkansas and Louisiana. Tetra Technologies is considering building a commercial lithium plant in Columbia County, and Exxon Mobil reportedly paid Galvanic Energy of Oklahoma City $100 million for brine leases on 120,000 acres in Columbia and Lafayette counties.

The lithium race, like the boom that followed drillers striking oil in the same formation a century ago, could transform Magnolia as well as El Dorado and the entire region.

Brine, Once a Byproduct     

The brine rush owes its life to the petroleum industry, which etched names like Murphy Oil and Lion Oil of El Dorado into Arkansas business history in the 20th century. The oil companies hit gushers of brine as well as petroleum in the Smackover Formation, then devised ways to profit from the saltwater they first saw as a troublesome byproduct.

“The reason the brine industry exists in south Arkansas is because of the oil and gas industry,” Standard Lithium CEO Robert Mintak told Arkansas Business. “They discovered the brine, they realized there was a commercial value in it to produce bromine [used in sanitation products and fire retardants], and that created a new industry. We’re actually building off that, so our legacy benefits from all the region’s oil and gas history.”

Government officials embrace the potential lithium rush, and while some residents have their doubts, they generally welcome the thousands of new jobs that could come with it. Columbia and Union counties have lost population for decades. After peaking above 27,000 in 1983, Columbia County was down to below 23,000 residents  in 2021. Union County, where El Dorado is the county seat, had about 38,000 residents in 2021, down from a peak above 50,000 in 1979.

“I think the jobs are going to be the best that we’ve seen in years in our market,” Vann said. “These are going to be six-figure jobs before it’s over with. Albemarle Corp. announced a $540 million expansion [in two Magnolia facilities for bromine extraction], and with a high school education and some common sense and hard work, our young people could be making six figures in about five years.”

Fourth District Congressman Bruce Westerman, chairman of the House Natural Resources Committee, told Arkansas PBS this month that Exxon Mobil’s leases could hold 4 million tons of lithium “worth between $30,000 and $60,000 per ton” at current prices. “Exxon’s looking to build a plant to meet 15% of the world’s demand,” Westerman said. “So this truly could be a major, major economic boon for south Arkansas.”

Westerman suggested that the eventual value of Arkansas’ lithium resources “may be more than the value of all the oil and gas produced in south Arkansas over time. … But it also comes with challenges because you’re talking about the influx of a lot of capital, which means you’re going to have a lot of construction workers, you’re going to have growth in the area, and it’s going to put pressure on everything from water systems and sewer systems to housing and education and even the hospitals in the area. … It’s a good problem to have, but it certainly needs to be addressed holistically.”

Big Projects, Big Partners

Standard pioneered lithium extraction in Arkansas, seizing on ways to fetch it from the brine directly and more kindly to the  environment. Traditional lithium miners pump mineral-rich saltwater into vast evaporation ponds. As months pass, the water evaporates, leaving a concentration of lithium. Standard’s method will bring brine to the surface, extract the lithium with innovative methods, and pump the water deep back into the ground.

Albemarle, of Charlotte, North Carolina, is the world’s largest lithium company, and hopes to apply that expertise soon in Arkansas.

Standard has partnered with the German multinational Lanxess, Koch Industries of Wichita, Kansas, and Tetra Technologies of Texas in two major south Arkansas projects. The first, in El Dorado, uses brine that Lanxess has already stripped of bromine. The other, in Columbia County, envisions a $1.27 billion production facility, new wells and pipelines.

The Lanxess project includes two demonstration plants in El Dorado that started producing lithium products in May 2020. With Koch’s help, Standard hopes to build the nation’s first commercial lithium plant in decades, perhaps starting construction next year in El Dorado. The plant would have the capacity to produce 6,000 metric tons of battery-quality lithium per year, and Lanxess has agreed to buy all that Standard can make.

The project takes advantage of Lanxess’ three brine-processing facilities, 200 miles of pipelines and 64 production and re-injection wells capable of processing 4 billion gallons of brine a year.

And Standard is planning an even bigger lithium plant about 15 miles west of Magnolia, where it has secured more than 27,000 acres of leases in partnership with Tetra. A preliminary feasibility study this summer projected that the site could yield 30,000 tons or more of lithium chemicals per year, and sell them to battery manufacturers for $30,000 a ton, a conservative estimate. That adds up to at least $900 million a year, less production costs of $4,000 per ton, about $120 million a year.

The U.S. now produces less than 5,000 tons of lithium chemicals annually, Mintak said.

“Domestic requirements for lithium chemicals are projected to be approximately 700,000 tons per year by the end of this decade,” he said.

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.

Capturing the Families

Magnolia, a college town of about 12,000, expects to gain residents. “The plants that they’re talking about are going to be 10 or 15 miles west of Magnolia,” Mayor Vann said. “What Magnolia is out to capture is the families that move to work in that field. And look at all of the other things that have to go with these families. We’ve got to have more groceries on the shelf. Do we need another dry cleaners? Do we need more restaurants, potential tire shops, truck repair shops? So much more goes with this.”

Housing is the top priority, said Ellie Baker, executive director of Magnolia Economic Development. “We have houses on the market but not necessarily those that are turnkey,” she said, noting that the city was already expecting an influx of residents from the Albemarle expansion and another by PotlatchDeltic Corp., the big timberland company.

“When you’re moving from another part of the state or country, you want to know that you have options for housing, and right now, it is very slim in Magnolia,” Baker said. Over the last few years, the town has improved sidewalks, infrastructure and bought a property downtown, once a nursery, to build affordable housing. (See sidebar.)

Mayor Vann expects a three- to five-year timeline, but has been told the lithium boom could add about 6,000 jobs in the region, and put 1,500 or more trucks on its roads. He wants Magnolia to be ready, focusing on building homes and roads, and improving water and sewer systems.

“When you push 1,000 to 5,000 people into a community, you’ve got to be ready and have the goods and services to go with it.”

Oil fields near Magnolia were America’s top producers during World War II. But the petroleum boom faded, as it did 35 miles to the east in El Dorado. But some old wells are being reopened for brine.

Bill Luther, president and CEO of the El Dorado-Union County Chamber of Commerce, said the region has been laying the groundwork for lithium and even battery-making. “Union County is the only location where you could start today with commercial lithium production,” he said. “Brine wells and the electrical infrastructure to power the existing wells and those under development are in place.”

Infrastructure to support downstream users of lithium is also on hand, he said.

“Battery manufacturers are like mini-steel mills, requiring a lot of power and water.” A Union County Water Conservation Board pipeline delivers Ouachita River water without depleting the Sparta Aquifer, a vital groundwater source. Entergy maintains 500-kilovolt power transmission lines traversing the county.

“The region will first see an investment in infrastructure,” Luther said, “followed by tremendous capital investment for commercial production.”

Standard has engaged BNP Paribas of Paris to help with project financing. Standard also looks to participate in federal programs promoting domestic sourcing of critical minerals. Its projects “align very well with Inflation Reduction Act policies that could benefit our project timeline and also address equity components” in finance, Mintak said. Standard is also expanding its work into east Texas.

He foresees “projects starting in Arkansas, and then developing them across into Texas, securing the leases and utilizing a direct lithium extraction process that is replicable across the region.”

A definitive feasibility study by Koch subsidiary Optimized Process Designs next year “will define the well-field parameters for production and reinjection wells, for the pipelines and the extraction and conversion facilities.”

Then Standard can identify operators and contractors. “We’ll take that study and turn it into an EPC [engineering, procurement and construction] contract to build the project,” Mintak said.

Tetra Technologies Inc. has given Standard exclusive lithium rights on 27,000 acres of brine leases. Tetra, which has a large bromine production facility in West Memphis, also expects to produce millions of tons of bromine from the waters.

Mintak said Standard is completing necessary studies and working with all stakeholders to deliver the projects as soon as possible. “We’re looking at ways to accelerate … We have an advantage working in Arkansas, because of the resource, the infrastructure, and real support at the community level. They want us to work faster, not slower.”