Arkansas’s nascent lithium industry was one of the key themes of the Arkansas Advanced Energy Association’s annual policy and workforce conference held Friday at the Junior League of Little Rock.
Jesse Edmondson, a government relations director with Standard Lithium, one of the main companies involved with developing the lithium business in the Smackover Basin in south Arkansas, discussed how ongoing disagreements over royalty rates are impacting the industry’s potential growth in the state.
“I’m an Arkansas native, and I’ve been in the critical minerals space for 12 years. I want nothing more than for Arkansas to really plant the flag for this and be the next lithium production in the United States,” Edmondson said. “But the thing that keeps me up at night is knowing that east Texas has higher quality lithium brine than Arkansas…but we are at an interesting crossroads with setting this royalty [rate].”
Landowners have been going back and forth for months over how much the major players, including Standard Lithium, looking to build the lithium extraction business in south Arkansas will have to pay for mineral rights. The issue will once again be discussed before the Arkansas Oil and Gas Commission in early November. Until it’s resolved, commercial mining of the lithium-rich brine cannot start.
Edmondson said that a 12.5% royalty rate proposed by the South Arkansas Minerals Association, the group representing the landowners, would effectively stop the development of the lithium industry in Arkansas.
“It would be detrimental to let this industry on our watch go to Texas,” Lauren Waldrip, AAEA executive director, said during a discussion with Standard Lithium. “That’s the last thing we want, not just from an industry standpoint but for the whole state.”
The concern from Edmondson and others in the industry is that a high royalty payout to mineral rights owners could cut into profits, making the Arkansas industry uncompetitive. Analysts predict that lithium prices will go up in coming years; however there is currently a glut of lithium on the global market, causing prices of the mineral to plummet. Lithium is a key component in batteries used to power electric vehicles.
“At the end of the day, it’s really important that we be globally competitive and it’s not about how much money we can make on the best of days, it’s about can this industry survive and keep all those jobs and benefits,” Edmondson said.
Standard Lithium and four other companies, including ExxonMobil, Albemarle, Tetra Technologies, and Lanxess, are seeking a 1.82% royalty for all of their projects across four counties; the South Arkansas Minerals Association has been pushing for mineral rights of around 10%, rates closer to royalties paid for oil and gas extraction.
The companies may have to revise their royalty rate application after a hearing earlier in October where legal counsel for the Arkansas Oil and Gas Commission issued an opinion concerning its legality.
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Publish date : 2024-10-18 11:08:00
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