Smackover Lithium Signs 2nd Offtake Agreement for South West Arkansas Project
Smackover Lithium on Monday announced the second offtake agreement for its planned commercial-scale direct lithium extraction plant in Lafayette County, putting it another step closer to a final investment decision for the $1.5 billion project.
The company, a joint venture between Standard Lithium Ltd. of Vancouver, British Columbia, and Equinor of Stavanger, Norway, said in a news release that it signed the deal with LG Energy Solution Ltd. of Seoul, South Korea, a global manufacturer of lithium-ion batteries for applications including energy storage systems and electric vehicles.
“We have now secured a vast majority of the offtake agreements needed to move forward with our Project financing plans and a Final Investment Decision,” Standard Lithium CEO David Park said. “We expect this to be the beginning of a long and mutually beneficial partnership whereby we will provide LG Energy Solution with a long-term supply of U.S.-based and sustainably produced battery-quality lithium carbonate.”
Per the deal, the Smackover Lithium plant in Lewisville will provide LG Energy Solution with 8,000 metric tonnes per year of battery-quality lithium carbonate over a 10-year period. In March, Smackover Lithium announced its first offtake agreement, with Trafigura Trading LLC of Houston, for the same amount of lithium over the same 10-year period, beginning after commercial production starts.
“We are pleased to begin this partnership with Smackover Lithium and the Agreement marks another step toward establishing a solid and resilient supply chain that keeps our products competitive in key strategic markets,” Kang Yeol Lee, LG Energy Solution’s procurement center leader, said in a news release.
“By bringing both battery production and sourcing to the U.S., we will deliver competitive and sustainable products to our customers driving the global energy storage and EV markets.”
On Aug. 19, LG Energy Solution announced the start of production at its new battery manufacturing center in Lansing, Michigan. The plant makes lithium-iron-phosphate battery cells for energy storage systems and nickel-manganese-cobalt cells for Toyota electric vehicles.
Moving Toward FID
Smackover Lithium has been seeking customer offtake agreements totaling about 80% of the 22,500 metric tonnes of annual production capacity for the initial phase of the Lewisville plant, which it refers to as its South West Arkansas Project.
With two offtake agreements in hand, Smackover Lithium said Monday that it has 90% of the total targeted offtake volume committed.
“The partnership remains in advanced discussions with several prospective customers and aims to conclude the offtake process shortly with the expectation of signing one additional smaller agreement,” the company said.
In December, the company said it had “expressions of interest from three major Export Credit Agencies,” including the Export-Import Bank of the United States and Export Finance Norway, “for over $1 billion” in project debt to fund the first phase of the SWA Project.
The partnership is now targeting a “final investment decision” — essentially, whether to move forward with project construction — “this year,” with construction “planned to begin promptly following FID, enabling first commercial production of battery-quality lithium carbonate in 2029.”
If Smackover Lithium holds to that schedule, it would be the first full-scale, commercial direct lithium extraction operation in Arkansas. Standard Lithium has been operating a DLE demonstration plant at Lanxess in El Dorado since May 2020.
Earlier this month, Smackover Lithium announceda community meeting to discuss the SWA Project at 4 p.m. Thursday, Sept. 17, at the Lafayette County High School Gymnasium. The company said the meeting will offer a chance for community members to get an update on the project and what’s next, as well as meet local construction contractors who will participate.
Standard Lithium owns a 55% interest in Smackover Lithium; Equinor holds the remaining 45% interest in the project, with Standard Lithium as operator.
“Arkansas sits at the heart of America's lithium boom, and we are ready to be a center not just of extraction, but of the refining and manufacturing that comes after it,” Arkansas Gov. Sarah Huckabee Sanders said in a news release. “This agreement shows that our industry is moving fast and that some of the largest companies in the world are looking to the Natural State.”
Get More: Read more about Standard Lithium, Equinor and Smackover Lithium in the Lithium Link archive.
Plus: Read Bloomberg’s report on the agreement