Oil & Gas Commission to Revisit Lithium Royalties at April Meeting

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

The last time we looked at a timetable for the Arkansas Oil & Gas Commission to set a royalty for brine rights holders in the expected south Arkansas lithium boom, the commission was to examine the issue at a Dec. 6 meeting.

They tabled the matter and a January meeting was canceled. Then bromine producer Lanxess AG and Standard Lithium subsidiary Arkansas Lithium LLC sought and were granted a continuance. The companies had proposed royalties up to $900 for lithium carbonate selling at $60,000 per ton, but prices have tumbled in an oversupplied market.

The battery-making ingredient was selling at $75.88 per kilogram in December 2022 but was down to $27.96 by December 2023. The big plunge came last February.

Oil & Gas Commission Director Lawrence Bengal told Arkansas Business last month that the commission will take up the matter again at an April 23 meeting.

Lithium, the lightest metal, will certainly be valuable when most new cars are powered by batteries, something many observers expect within 20 years.

But companies working to extract commercial lithium products from underground brine are looking for price clarity. Mineral rights owners in Columbia and Lafayette counties may have to wait.

“The state has been tackling this and doing a good job, I might add,” said engineer and brine field veteran Robert Reynolds, president of Shuler Drilling of El Dorado. Reynolds said that the Oil & Gas Commission was charged with establishing a royalty on any mineral extracted from brine after Jan. 1, 1979. The Legislature had long before established a royalty on bromine, “which is the only other mineral produced out of brine to this date,” Reynolds said. “We had temporary production of calcium chloride from 2000 to 2020 where the Oil & Gas Commission established that royalty, but it didn’t pan out and was ceased a couple of years ago.”

Reynolds said that Lanxess, a brine and bromine producer in Union County, and the Standard Lithium subsidiary made the royalty application but then asked for it to be continued. “Lanxess and Arkansas Lithium appeared before the Oil & Gas Commission and met most of the requirements of the commission except for one. So the matter has been postponed or rescheduled for April 23 of this year.”