The Debate Over Arkansas’ Lithium Royalty Grows
Welcome to Lithium Link, your resource for insightful news and expert commentary on the latest happenings in the Arkansas lithium scene.
New this week:
In a cover story for the Aug. 26 edition of Arkansas Business, Kyle Massey goes inside the dispute over lithium mining royalties in Arkansas.
The state has yet to set a royalty rate for extracting lithium from brine. Five major mining companies operating in South Arkansas — including Standard Lithium Ltd. of Vancouver and ExxonMobil affiliate Saltwerx — filed a joint application with the Arkansas Oil & Gas Commission in July to set one.
A group of landowners represented by the South Arkansas Minerals Association say the proposed rate — 1.82% of the market value of battery-quality lithium carbonate — is too low. They think the rate should be 12.5% of sales of lithium carbonate equivalents, Massey reports.
Context:
Lithium is a crucial component in batteries for electric vehicles and other power storage technologies, and global demand for lithium is expected to surge in the coming years. The dispute over royalties could affect the development of lithium mining projects in Arkansas.
Landowners are seeking higher royalty rates to reflect the strategic importance of lithium, advocating for a fair share of the profits from lithium extraction.
Mining companies, meanwhile, are offering royalty rates they deem economically viable for their operations, seeking to balance investment costs with potential returns in a competitive market.
Previously:
Arkansas Commerce Secretary Hugh McDonald knows a lot is riding on Arkansas’ ability to set the royalty. In an interview with Lithium Link in early August, he said Arkansas getting the royalty right was among the state’s top priorities in getting the nascent lithium extraction industry growing here.
“I think we’ll get that right at the end of the day,” McDonald told Lithium Link. “It’s got to be fair. It’s got to be certain for the producers. It’s got to be competitive — we can’t kill the industry before it starts.”
What’s Next:
The Oil & Gas Commission is scheduled to hear the companies’ application on Sept. 24 in El Dorado (a live stream will be available here). Massey reports that the commission is expecting a packed house, holding the meeting at an auditorium at South Arkansas College:
“They anticipate more people than they have chairs at the Oil & Gas Commission,” Robert M. Reynolds, president of Shuler Drilling Co. of El Dorado, said.
More: Read Massey’s full report in Arkansas Business.
In the U.S. and Europe, Hard Choices Over Lithium Mining
Two news stories this year have shown the hard choices governments at home and abroad must make when extracting lithium through conventional mining methods that have a greater environmental impact than the direct lithium extraction (DLE) method companies in Arkansas are exploring.
In Nevada:
Ioneer of New South Wales, Australia, wants to dig a 960-foot-deep open-pit lithium mine it says would more than quadruple U.S. lithium production. But it faces opposition from conservationists seeking to protect the world's only known patches of endangered Tiehm's buckwheat. Ioneer says it has a plan to protect the plant, but conservationists are skeptical.
“The destruction of habitat is guaranteed whereas the success of the mitigation is dubious at best,” said Patrick Donnelly, the Center for Biological Diversity's Great Basin director.
The massive project would include 1,200 acres of waste rock dumps, a sulfuric acid processing plant and ancillary facilities. But Ioneer says it would produce “enough lithium carbonate per year over its 26-year life to make 370,000 electric vehicle batteries a year.”
In Serbia:
The government reinstated mining group Rio Tinto’s license to develop what would be Europe’s biggest lithium mine, the $2.4 billion Jadar lithium project in Western Serbia. Proponents say the mine could cover 90 percent of Europe's lithium needs, reducing its dependence on lithium from other sources. But:
“There is strong opposition to the project among activists and opposition parties in Serbia,” Reuters reports. “They have threatened to radicalize protests by blocking roads and railways if the project is revived.”
Both projects — in Nevada and Serbia — show how governments, businesses and conservationists are struggling to balance environmental stewardship with the need to source key minerals — including lithium —and reduce their dependence on foreign suppliers.
They also offer a stark contrast with lithium mining efforts in Arkansas. The considerations for companies mining lithium from Arkansas brine through the DLE method are far less fraught:
Proponents say DLE, in addition to being more efficient and cost-effective, is more sustainable and environmentally friendly than hard rock mining.
They also note far less land and water use, and less waste.
And, they say DLE creates far fewer emissions, and the production time is faster.
More: Read about the Nevada mine via the Arkansas Democrat-Gazette, and the Serbia mine via Balkan Green Energy News, the Associated Press and Reuters.
