A company developing a major lithium project in South Arkansas has signed an estimated $1.5 billion agreement to supply battery manufacturer LG Energy Solution with lithium produced from the state’s Smackover Formation.
Smackover Lithium announced Monday, August 31st, that it entered into a binding 10-year agreement with LG Energy Solution for 8,000 metric tons of battery-quality lithium carbonate annually.
The agreement is expected to begin once commercial production starts at the Southwest Arkansas Project.
The approximately $1.5 billion figure represents the estimated value of lithium to be purchased by LG over the 10-year agreement and is not a $1.5 billion investment by LG in Arkansas. Specific pricing and other commercial terms were not disclosed.
Smackover Lithium is a partnership between Standard Lithium and Equinor developing the project across approximately 30,000 acres of brine leases in Lafayette and Columbia counties. A central processing facility is planned south of Lewisville.
The project’s first phase is designed to produce approximately 22,500 metric tons of battery-quality lithium carbonate annually using brine drawn from the underground Smackover Formation.
The lithium would be extracted from the brine before the depleted brine is reinjected underground.
Monday’s agreement is the project’s second major long-term supply deal this year.
Smackover Lithium previously reached a 10-year agreement with Trafigura in March for another 8,000 metric tons of lithium carbonate annually.
Together, the agreements account for 16,000 metric tons of planned annual production. Smackover Lithium said it has now secured approximately 90% of the amount of production it intends to commit through long-term agreements and is discussing an additional smaller agreement with another potential customer.
The agreements are also expected to support efforts to finance construction of the Southwest Arkansas Project. Smackover Lithium has reported indications of interest for more than $1 billion in potential project debt from export credit agencies, which are conducting due diligence on the development.
The project has separately received a $225 million grant from the U.S. Department of Energy. Federal officials completed an environmental review earlier this year and issued a finding of no significant impact for the proposed development.
Smackover Lithium is targeting a final investment decision on the project in 2026. If approved for construction, commercial lithium production is currently targeted to begin in 2029.
LG Energy Solution is a South Korean battery manufacturer serving electric vehicle and energy-storage markets.
The company said the Arkansas agreement is part of its effort to expand its battery-material supply chain in the United States.
The Southwest Arkansas Project is part of a broader effort to develop lithium resources within the Smackover Formation and establish a domestic supply of the mineral used extensively in rechargeable batteries.