A ‘geologic freak’ called the Smackover may end America’s lithium dependence on China, and Big Oil is already there

The United States may soon be able to produce lithium domestically, potentially ending its dependence on China, thanks to a geological formation known as the Smackover. Over the past decade, global lithium demand has surged more than 400%, with projections predicting it could reach 4 million tons per year by 2035. Lithium-ion batteries, crucial for electric vehicles, utility-scale and data center energy storage, and the emerging robotics industry, are driving this demand.

Currently, the U.S. produces only about 1% of the world's lithium, primarily from Albemarle's Silver Peak mine in Nevada. However, the Smackover Formation, located about 1,500 miles from Silver Peak in southern Arkansas and East Texas, could change this. This formation has unusually high lithium concentrations, with estimates suggesting it could produce over 150,000 tons per year, according to Standard Lithium CEO David Park.

Two companies are vying to develop the Smackover for lithium production: Standard Lithium and EnergyX. Standard Lithium plans to start construction on its first phase in the first quarter of 2027, while EnergyX aims to break ground on its 15,000-ton commercial facility by the end of 2027. EnergyX is led by Teague Egan, a 38-year-old Elon Musk acolyte.

Both companies are employing a newer technology called direct lithium extraction (DLE), which allows for the extraction of lithium from underground brine water using wells, processing, and refining. This method eliminates the need for hydraulic fracturing, reducing seismicity concerns, and requires significantly less land compared to traditional evaporation ponds. DLE also has a much shorter processing time, only about two days.

While DLE remains unproven at a commercial scale and faces challenges such as Chinese price manipulation and the elimination of EV tax credits in the U.S., analysts believe it is the only viable option given the geology of the Smackover. These projects are long-term investments, spanning 25 years, and lithium demand is expected to grow at close to 20% annually.

The self-driving vehicle and robotaxi industries, which are largely based on electric vehicles (EVs), are also contributing to the growing demand for lithium. Companies like Tesla, Waymo, Avride, and Zoox are betting on the future of EVs and robotaxi services. Standard Lithium's CEO, David Park, believes that building the necessary infrastructure in the U.S. will help bypass China's potential price manipulation tactics and secure a more stable supply of lithium for domestic battery manufacturing.