Arkansas Lithium Players Propose Royalty Rate
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Arkansas’ biggest lithium companies have filed a joint application with the Arkansas Oil & Gas Commission to set the royalty rate for extracting the mineral from brine in the Smackover Formation in Arkansas.
Albemarle Corp. of Charlotte, North Carolina; Saltwerx, an affiliate of global energy giant ExxonMobil; Standard Lithium Ltd. of Vancouver; Lanxess of Cologne, Germany; and Tetra Technologies of The Woodlands, Texas, applied on July 26. The commission is scheduled to consider it during its Sept. 26 meeting in El Dorado, according to the Arkansas Democrat-Gazette.
"Implementing a balanced and reliable royalty system is essential for advancing Arkansas' lithium industry," Chris Lang, Standard Lithium's finance director, wrote in a statement to the newspaper.
"Building on the state's regulatory strengths will help drive local economic growth and ensure responsible development. We look forward to the Arkansas Oil and Gas Commission's review and working collaboratively with all stakeholders to achieve this vision."
Flashback: Standard Lithium and its partner Lanxess had submitted a previous royalty application to the commission earlier this year but withdrew the plan in April, just ahead of an oil and gas commission hearing. The companies gave no reason for why they withdrew the plan.
The plan: The companies’ July 26 application outlines high- and low-index price scenarios for what mineral rights holders would receive:
“…[I]n a ‘low index price scenario,’ if someone owned 160 acres of mineral rights in an area where lithium extraction is occurring, that owner would receive approximately $5,352 annually, based on 5,400 tons of Lithium Carbonate Equivalent produced per year,” the Democrat-Gazette reports. “Alternatively, in a ‘high index price scenario,’ that same owner would earn approximately $30,052 annually. These numbers are based on data from Standard Lithium's pilot plant.”
If adopted, the royalty plan would mark a key milestone in the development of Arkansas' nascent lithium extraction industry. Companies and landowners have been waiting for years for a rate to be set. Arkansas already has a royalty for brine used in bromine production.
Read more on the plan, what the four elements the royalty is based on, and the arguments for not basing the payment on actual sales and costs, here.
Albemarle Cleared to Test Lithium Extraction in Arkansas
The green light: Last week, the Arkansas Oil & Gas Commission gave Albemarle the go-ahead to test lithium extraction in Arkansas. Albemarle, which produces bromine in Magnolia, is now the second company authorized to test lithium extraction here — the other being Standard Lithium.
The commission voted 7-1 to allow Albemarle to test its direct lithium extraction method at a pilot plant without paying commercial production royalties. The company doesn’t have to pay royalties to mineral rights holders because the lithium will not be sold commercially.
Meanwhile: The Arkansas Democrat-Gazette reports that the commission’s order also said that Albemarle won’t be subject to some of the public reporting requirements that Standard Lithium has been subjected to, though it “will still have records available for the commission to examine at its facility.”
Standard Lithium, which must file quarterly reports with the commission, asked the commission to impose the same reporting requirements that Albemarle must follow.
For its part, Albemarle said it supports removing some of the reporting requirements from Standard Lithium.
Read more here.
Pantera Minerals Adds to Its Arkansas Holdings
Pantera Minerals of West Perth, Australia, which entered Lafayette County earlier this year through the purchase of brine leaseholder Daytona Lithium Pty Ltd., has expanded its holdings in the area.
The company announced July 17 that it added more than 3,700 acres to its area holdings, bringing total leased acreage to 25,988.
Source: Pantera Minerals
In a statement, the company’s executive chairman, Barnaby Egerton-Warburton, called the region “America’s new Lithium Capital” and noted the acreage’s location near other property controlled by competitors Standard Lithium Ltd./Equinor ASA, ExxonMobil Corp., Tetra Technologies and Albemarle Corp.:
“The significant investments by leading companies such as Exxon Mobil, Equinor, and Standard Lithium in the Smackover region highlight the immense potential in this area,” he said. “This, alongside the strategic advancements in the area and the future construction of a large-scale processing facility by Exxon, underscores the potential of the Smackover Formation.”
Looking Ahead: The company plans to acquire more land and says its first test well is “imminent.” It has partnered with publicly traded global oilfield services company SLB of Houston, which is conducting a subsurface study of the lithium and bromine brine potential and optimal locations for future wells.
Read more: Industry website Mining Technology reports on Pantera’s plans here. Pantera’s news release, which includes a map of its acreage, is available here.
