Lithium players to gather in Arkansas as low prices pressure industry

Tetra Technologies

14/02/2024 15:52

By Ernest Scheyder
       LITTLE ROCK, Arkansas, Feb 14 (Reuters) - Exxon Mobil
 XOM.N , Albemarle  ALB.N  and others eyeing ways to tap
Arkansas's vast lithium reserves will gather in Little Rock this
week as the industry grapples with sagging prices for the
battery metal that have spooked investors and fueled layoffs. 
    More than 625 people - including policymakers, bankers and
corporate executives - are set to attend the sold-out Arkansas
Lithium Innovation Summit on Thursday and Friday. 
    Among topics for discussion is how direct lithium extraction
(DLE) technologies could be used to make Arkansas the epicenter
of the U.S. lithium industry by filtering the metal from the
underground Smackover brine formation.
    "This could be a big boon for our state," Arkansas Governor
Sarah Huckabee Sanders, a Republican, told Reuters. "We have the
resource, we have the right regulatory environment, and we have
a very business-friendly climate."
    Bromine - a chemical used in fire extinguishers - has been
extracted from the Smackover's salty brines for decades by
Lanxess  LXSG.DE , Albemarle and others. 
    DLE offers the prospect of also filtering lithium from that
brine before it is reinjected back underground without the use
of traditional evaporation ponds, something that has never
before been done at commercial scale. 
    Extracting lithium from brine is a complex chemical process
and there have also been practical considerations to address,
such as tackling pipe corrosion. 
    Nonetheless, a crop of companies is in hot competition to be
the first to commercially deploy DLE.
    Analysts estimate the Smackover could contain more than 4
million metric tons of lithium, enough to make millions of
electric vehicles and other electronic devices. 
    While lithium demand is expected to jump later this decade,
recent overproduction in China has dragged on prices. A basket
of lithium prices compiled by Benchmark Mineral Intelligence has
dropped 80% in the past year.
    That led Albemarle to lay off workers and slash its budget
last month, although the company said it would continue to fund
its Arkansas DLE project. Rival Piedmont Lithium  PLL.O , which
is developing a North Carolina lithium project, cut nearly a
third of its staff this month.
    Summit Nanotech, a privately held DLE technology developer
that is a conference co-sponsor, said it is less concerned about
short-term lithium prices and more interested in U.S. growth. 
    "We're all trying to understand the potential and challenges
of the market in Arkansas," said Sandro Mazzini, Summit's chief
commercial officer.
    The Arkansas Oil and Gas Commission, which oversees brine
extraction, has not yet set the state's crucial lithium royalty
rate, for instance.
    "I want us to be very thoughtful so that however we set this
(lithium royalty) up, it's done correctly," said Sanders, who
served as White House press secretary from 2017 to 2019 under
former President Donald Trump. Sanders said Trump sees lithium
production as part of his push to bolster U.S. energy
independence.  
    "I have full confidence that President Trump sees the
importance of lithium to an all-of-the-above energy strategy,"
Sanders said.
    Exxon - which last year paid more than $100 million for
lithium-rich Arkansas acreage - and partner Tetra Technologies
 TTI.N  aim to be the first to produce the metal in Arkansas by
2026. 
    Tetra, which produces chemicals for water treatment and
recycling, said it hopes the royalty reflects technical
challenges to filter lithium. 
    "We'll have to spend a lot of money and deploy a lot of
technology to extract pretty small volumes of lithium out of
large volumes of brine," said Brady Murphy, Tetra's CEO. "That's
part of the complexity of getting this equation right."
    Koch Industries-backed Standard Lithium  SLI.V , which has
been trying to produce lithium in the state since at least 2018,
is also a conference co-sponsor.

 (Reporting by Ernest Scheyder; Editing by Jan Harvey)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))