The United States is betting on an unusual underground aquifer in Arkansas and East Texas to reduce its reliance on China for lithium, as demand for the battery metal accelerates across electric vehicles, grid storage and robotics.
The Smackover Formation, known for oil production discovered a century ago, contains exceptionally high concentrations of lithium in its brine. Standard Lithium is preparing to begin construction on the first major commercial project in the region, while EnergyX, ExxonMobil and Chevron are also developing positions there.
Global lithium demand has risen by more than 400% this decade to over 1.5 million metric tons a year. It could approach 4 million tons by 2035, driven not only by electric cars but also by utility-scale batteries, data-centre backup systems and emerging robotic technologies.
The US currently produces little more than 1% of the world’s lithium, mainly from Albemarle’s Silver Peak operation in Nevada. China, although not the leading miner, dominates refining and battery manufacturing.
Smackover lithium projects gather pace
Standard Lithium plans to authorise its South West Arkansas project late this year and begin construction on its initial 22,500-tonne phase in the first quarter of 2027. The company expects eventually to double capacity to 45,000 tonnes a year.
It is also advancing the Franklin project in East Texas, which could produce up to 70,000 tonnes, alongside two further facilities. Standard Lithium chief executive David Park said lithium concentrations increased further east, although Arkansas was ahead in technical development and regulation.
“It’s a geologic freak with its very high lithium concentrations,” Mr Park said. He said the company’s land holdings alone could support production of more than 150,000 tonnes a year.
EnergyX, led by chief executive Teague Egan, is targeting a 15,000-tonne commercial facility known as Project Lonestar, near Texarkana. Construction could begin by the end of 2027, following the launch of a 250-tonne pilot plant earlier this year.
The company has signed a ten-year offtake agreement with Trafigura covering Lonestar and its Project Black Giant in Chile. Mr Egan said the deal covered 100,000 tonnes and almost 2 billion dollars in lifetime value, with Trafigura due to take 30% of Lonestar’s output.
EnergyX plans to increase Lonestar’s capacity to 50,000 tonnes by 2031. It has also agreed to supply lithium through the project as it expands its operations in the US and South America.
Direct lithium extraction under scrutiny
The Smackover is attracting oil companies because its lithium cannot be extracted through the conventional open-pit mines or evaporation ponds used in some leading producing countries.
Instead, operators are relying on direct lithium extraction technology. Wells are drilled in a similar way to oil and gas operations, brine is pumped to the surface and the lithium is separated before more than 90% of the remaining water is returned underground.
The method does not require hydraulic fracturing. It can also reduce the extraction period from about two years for evaporation ponds to roughly two days, although much of the cost is incurred in building wells and processing facilities.
“You extract the lithium, and then you reinject the remainder of the brine so that it leaves the ecosystem the same as it was before,” Mr Egan said. “There are no huge pits or huge ponds. It takes basically one-hundredth of the land footprint.”
Direct lithium extraction has yet to be proven at commercial scale. Max Yerrill, a critical minerals analyst at BMO Capital Markets, said it would have to compete in a global market exposed to Chinese pricing, while the removal of US electric vehicle tax credits had weakened domestic demand.
“I think DLE is the only way,” Mr Yerrill said, describing the technology as a necessity dictated by the geology. He added that the quantities of lithium in the Smackover were substantial in theory, but that it remained unclear whether they could be extracted economically.
ExxonMobil and Chevron join US lithium race
ExxonMobil has secured more than 400,000 net acres in the formation, making it the largest landholder there. It plans to begin building a pilot project in Arkansas next year, after drilling exploration and appraisal wells and testing its technology at a Houston facility.
Chevron has acquired a 125,000-acre position. ExxonMobil said the Smackover had the potential to become a significant domestic source of lithium and that it was well placed to develop it.
The projects are intended to include refining facilities, allowing material to be processed in the US rather than sent to China. That prospect has given the region strategic importance as American battery manufacturing expands.
“It’s critically important to bypass the Chinese bottleneck,” Mr Park said. “We’ve seen them weaponize other critical minerals. We’re strategically exposed. If they want to cut us off, they can.”
Standard Lithium’s Arkansas project has received a 225 million dollar grant from the Biden administration, while the Trump administration fast-tracked its permitting. Norway’s Equinor is a 45% joint-venture partner, and the project has offtake agreements with Trafigura and battery maker LG Energy Solution.
Mr Yerrill said lithium demand was still growing at close to 20% or more a year even in a weak market. The expansion of battery storage, self-driving vehicles, robotaxis and data-centre infrastructure is broadening the industry beyond conventional electric cars.
“Batteries are the future, and lithium batteries have the most robust infrastructure, and that’s what we need for robotics,” Mr Egan said. “That’s what we need for grid storage, for energy resiliency, for data center backup, and redundancy. It’s what we need for everything.”
Standard Lithium’s first Smackover facility is now approaching construction. “We’re near the finish line or, I should say, we’re near the starting line,” Mr Park said.
