Smackover projects aim to cut US reliance on Chinese lithium refining

Standard Lithium, the leading developer in the formation, is slated to authorize its South West Arkansas Project (SWA) later this year and start construction on a first phase capable of producing 22,500 tons per year. CEO David Park told Fortune the company believes its acreage alone has the potential for over 150,000 tons per year of production, and it plans to double capacity to 45,000 tons after the first phase.

The United States currently produces just over 1 percent of the world's lithium, largely from a single mine in Nevada, while China is the world's top lithium refiner. The Smackover Formation, where crude oil was discovered a century ago, contains lithium in brine that can be extracted using direct lithium extraction (DLE) technology, a process that takes about two days, compared with two years for evaporation ponds. EnergyX CEO Teague Egan said DLE takes one-hundredth of the land footprint. No hydraulic fracturing is needed.

Rival Austin-based EnergyX, led by Teague Egan, could break ground on its 15,000-ton Project Lonestar near Texarkana by the end of 2027, after bringing a 250-ton pilot plant online this year. Egan said an offtake agreement with Trafigura for Project Lonestar and Project Black Giant in Chile covers 100,000 tons and nearly $2 billion in lifetime value, which he called the largest DLE offtake in history. He plans to expand the project to 50,000 tons by 2031.

ExxonMobil has built the largest position in the formation, holding more than 400,000 net acres, and intends to start building a pilot project in Arkansas next year. "The Smackover has the potential to become a significant source of domestically produced lithium, and ExxonMobil is uniquely positioned to help unlock it," the company said in a statement. Chevron announced a 125,000-acre position last year.

Max Yerrill, a critical minerals analyst at BMO Capital Markets, expressed cautious optimism. DLE is unproven at commercial scale and must compete in a global market vulnerable to Chinese price manipulation, he said. “In theory, there are huge amounts of lithium in the Smackover. It's yet to be proven if it's economic to do so,” he said. “But I think it makes sense. You're not planning for one year out. These are 25-year projects.”

The SWA project received a $225 million grant from the Biden administration, and the Trump administration fast-tracked its permitting. Norway's Equinor is a 45 percent joint venture partner. Offtake agreements are in place with Trafigura and LG Energy Solution. “It's critically important to bypass the Chinese bottleneck,” Park said. “We've seen them weaponize other critical minerals. We're strategically exposed.” He credited the Trump administration and said the industry could use a further catalyst.

The Trump administration has eliminated electric vehicle tax credits. Yerrill said lithium is still a market growing at close to 20 percent or more annually. Egan said lithium is used for more than electric cars, including grid storage, data-center backup and robotics. Park said, “Demand is not the constraint at this point. The real question is, will supply be able to keep up?”