Multinational corporations such as Albemarle Corporation, ExxonMobil, Standard Lithium, Lanxess, and Tetra Technologies Inc. are vying to extract lithium from the Smackover Basin in south Arkansas, leading to disputes over royalty rates for landowners. The companies jointly proposed a 1.82% royalty rate, which was met with objections from the South Arkansas Minerals Association demanding a 12.5% rate instead.
The Arkansas Oil and Gas Commission will consider the proposed rate in September, which will determine when companies can scale up commercial production. Standard Lithium, utilizing Direct Lithium Extraction technology, aims to extract lithium with minimal environmental impact. The conflict stems from differing views on whether rates should align more closely with traditional brine royalties at 1-2% or oil and gas royalties at 11-12%.
The potential economic promise of lithium extraction in south Arkansas, where poverty rates exceed the state average, has prompted a push for a domestic lithium supply chain. The federal government included lithium on the Critical Minerals List, emphasizing the mineral’s importance to national security. Arkansas politicians and industry leaders see lithium royalties as a key economic boost for the region.
Despite industry arguments for lower rates due to high investment costs and risks, the South Arkansas Minerals Association contends that landowners should be fairly compensated. The association represents large landowners, including companies like Murphy Oil Corporation. The ongoing debate highlights the tension between economic development and fair compensation for landowners in the emerging lithium industry in Arkansas.
Source
Photo credit arktimes.com
