The U.S. is on the verge of a lithium revolution, and Arkansas is at the heart of it. The U.S. Geological Survey (USGS) has uncovered a staggering lithium reserve beneath southwestern Arkansas, potentially enough to fuel the nation’s green tech transition and drastically reduce its dependence on foreign imports. This discovery could reshape the landscape of the U.S. lithium market, significantly impacting the future of electric vehicles (EVs).
The USGS, using advanced water testing and artificial intelligence, unearthed an estimated 19 million tons of lithium. This colossal reserve could potentially replace all of the U.S.’s lithium imports, according to Katherine Knierim, a hydrologist and the study’s principal researcher. “Our research was able to estimate total lithium present in the southwestern portion of the Smackover in Arkansas for the first time. We estimate there is enough dissolved lithium present in that region to replace U.S. imports of lithium and more,” she stated.
The source of this lithium treasure? The Smackover Formation, a geological unit spanning across the Southern U.S. states, is a remnant of an ancient sea. It comprises porous and permeable limestone rich in oil and bromine, a geological formation that has recently garnered attention for its brine water, a byproduct of oil exploration. This brine water, rich in lithium, presents a unique opportunity for extraction.
Large oil producers like Exxon Mobil have recognized the potential of this discovery. ExxonMobil has announced plans to begin lithium extraction by 2027, aiming to produce enough lithium for one million electric vehicles annually by 2030. They intend to utilize Direct Lithium Extraction (DLE) technology, a faster and more environmentally friendly method compared to traditional mining.
DLE has demonstrated high profitability potential. Canadian pioneer Volt Lithium recently produced the first battery-grade lithium from brine in the Permian basin, showcasing the viability of this method. Volt Lithium estimates production costs at $2,900 per ton, even from low-concentration brine, a figure significantly lower than the current market price of around $10,500 per ton.
This discovery is a game-changer for the U.S., which currently relies on foreign sources for a significant portion of its lithium needs. The U.S. imports 25% of its lithium, primarily from Australia and South America, with China dominating lithium processing. This dependence has raised concerns about supply chain vulnerabilities and potential disruptions. The discovery in Arkansas could potentially solve this issue, bolstering domestic lithium production and creating a more resilient supply chain.
The potential of Arkansas’ lithium reserve has sent ripples through the financial market, with lithium stocks experiencing a surge in value. Piedmont Lithium PLL witnessed a 17% climb yesterday, although it has since given back most of these gains. Major lithium ETFs like Global X Lithium & Battery Tech ETF LIT and Amplify Lithium & Battery Technology ETF BATT saw modest gains between 2% and 3% Wednesday morning before plateauing.
The discovery in Arkansas presents a compelling opportunity for the U.S. to solidify its position as a leader in green technology and electric vehicle production. With major players like ExxonMobil committed to extracting lithium from this resource, coupled with favorable government support, Arkansas could become a central hub for U.S. lithium production, significantly impacting the nation’s future in the electric vehicle revolution.
