Standard Lithium said this week that it regards as positive an economic assessment for future lithium production in Columbia and Lafayette counties.
This could mean a capital investment of about $870 million in brine field and lithium processing facilities, with potential full-time employment of 75 people. The South Arkansas-produced lithium would serve an expanding market for rechargeable batteries, especially in electric vehicles.
Standard Lithium also said it has acquired an option on land suitable for a future brine processing and conversion facility that is “well served by existing infrastructure.” It didn’t name a specific location.
The Vancouver, B.C., Canada-based company released a preliminary economic assessment (PEA) for its “South-West Arkansas Lithium Project,” previously called the Tetra Project.
Key points included the following:
-- Pre-tax net present value (NPV) of $2.83 billion at an 8% discount rate, and an initial rate of return (IRR) of 40.5 percent. After-tax NPV of $1.97 billion at 8% discount rate and IRR of 32.1 percent. Investorpedia defines NPV as the different between the present value of cash inflows and the present value of cash outflows over time. An IRR is a discount rate that makes the NPV of all cash flows equal to zero in a discounted cash flow analysis.
-- A 20-year mine-line producing a yearly average of 30,000 tons of battery-quality lithium hydroxide monohydrate.
-- Operating costs of $2,599 per ton of battery-quality lithium hydroxide. This contrasts with a selling price of $14,500 per ton.
-- A capital investment of $870 million, including a 25% contingency of direct capital costs.
The company has updated the area’s lithium brine resource to consider the potential unitized area of production, leading to an increased total resource of 1,195,000 tons of lithium carbonate equivalent.
“The PEA and updated lithium resource estimate are based on a unitized area of future potential production resulting in 36,172 gross mineral acres (14,638 gross mineral hectares). The PEA considers the production of battery-quality lithium hydroxide averaging 30,000 tons per annum (TPA) over a 20-year operating timeframe. The PEA also updates the existing inferred mineral resource.
“The PEA is preliminary in nature and includes inferred resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty the estimates presented in the PEA will be realized,” the Standard Lithium statement cautioned.
Standard Lithium has an option with Tetra Technologies for 27,262 acres in existing brine leases held by Tetra. Most of the land is leased by Tetra from property owners in the area of Lake Columbia westward to Arkansas 29 in Lafayette County, south of U.S. 82.
“The development plan for the PEA considers the production of battery-quality lithium hydroxide averaging 30,000 tons per annum (TPA) over a 20-year operating timeframe. The project contemplates, in broad terms, the extraction of brine from the southern portion of the project where the brine has a higher lithium grade (approximately 400 mg/L) and better reservoir characteristics, and reinjection of the tailbrine into the northern part of the project where the lithium grade is significantly lower (approximately 160 mg/L).
“The lithium extraction process is based on the company’s proprietary LiSTR technology, and the final conversion to a lithium hydroxide product will use an electrochemical process tailored to lithium hydroxide production. The project is located in an area with significant existing infrastructure such as water, power, gas, road, rail and workforce; plus existing operating oil and gas assets, including wells, collection systems, easements and gas processing facilities.
“It should be noted that the company has secured an option to acquire a key parcel of land in the contemplated project area. This land may be suitable for siting a future brine processing and conversion facility as it is well served by existing infrastructure, utilities and pipeline easements. Development of the project, subject to continuing project definition, due diligence and receipt of future feasibility studies, contemplates production commencing in 2025 from the land package assembled by the company to date.”
“As the PEA contemplates a future production scenario (subject to ongoing project development and de-risking), it is necessary to model the potentially available resource by aggregating these leases into a single unitized production area; this has the effect of ‘filling in the gaps’ between the lease parcels to generate a single unitized area of 36,172 gross mineral acres (14,638 gross mineral hectares),” the statement said.
“Note that this ‘unitizing,’ or ‘grossing-up’ of the existing leases to a possible future production area is normal for brine production in Arkansas (the Arkansas Brine Statute), and can only be considered when the net holding in the unitized area is greater than 75%. Note also that future aggregation and unitization of the leases is subject to regulatory approval, and will be governed by an existing process that is managed and overseen by the Arkansas Oil and Gas Commission (AOGC),” the statement said.
Standard Lithium divides the potential lease from Tetra into “South” and “North” resources areas. If Standard Lithium moves forward with a brine field development plan, it would use a network of 23 brine supply wells that would produce an average of 7,238 gallons a minute. This would come from South Resource brine field, which apparently possesses a higher grade of lithium.
“The average brine supply well production rate is similar to the two existing bromine operations located immediately to the east of the Project,” the statement said, referring to Albemarle Corporation operations in Columbia County. “Brine from the supply wells would be conveyed to a lithium extraction and lithium hydroxide production facility by a network of underground fiberglass pipelines totaling approximately 11.4 miles) in length.
“The brine entering the production facility would be pre-treated to remove hydrogen sulphide gas (H2S), suspended solids and hydrocarbons, prior to processing by the company’s proprietary direct lithium extraction process (LiSTR). After LiSTR processing, the lithium depleted brine is returned to the lower-grade North Resource area by a pipeline system 12.6 miles in length to a network of 24 brine injection wells completed in the Smackover Formation. All extraction and reinjection would occur in the single unitized area to maintain reservoir pressures,” the statement said.
Standard Lithium’s LiSTR process uses a fine-grained, solid, inorganic adsorbent to selectively adsorb lithium ions from the brine. This produces a concentrated lithium chloride solution and is the process Standard Lithium is testing at its Union County demonstration plant.
“The concentrated lithium chloride solution from LiSTR is further concentrated by high pressure reverse osmosis and impurities are removed through ion exchange. The further concentrated and purified lithium chloride solution is processed by electrolysis to form a highly pure lithium hydroxide solution. This solution is crystalized into a solid, battery-quality lithium hydroxide monohydrate,” the statement said.
“At full build-out, with estimated average production over 20 years of 30,000 tons per annum of lithium hydroxide, the direct capital costs are estimated at $532 million, with indirect costs of $205 million. A contingency of 25% was applied to direct costs ($133 million) to yield an estimated all-in capital cost of $870 million.
Standard Lithium figures operating cost estimates to include both direct costs and indirect costs, as well as allowances for mine closure.
“The majority of the operating cost comprises reagent usage required to extract the lithium from the brine, as well as conversion to lithium hydroxide monohydrate and electricity consumption. Out of this, the greatest amount is related to acid and base consumption (hydrochloric acid and ammonium hydroxide) and was estimated using information from the operating Demonstration Plant located in Union County.
“The all-in operating cost of $2,599 per ton of lithium hydroxide is one of the lowest reported in the industry owing to two key factors which are location-specific. DLE (direct lithium extraction) processes are reagent intensive; in the case of the LiSTR process, the principal reagent cost is hydrochloric acid. A large portion (approximately 50%) of the acid required is produced on-site as a by-product of the electrochemical conversion of lithium chloride to lithium hydroxide. This can result in significant cost-savings during the lithium extraction step.
“The electrochemical conversion uses a large quantity of electricity, which would normally (in most jurisdictions around the world) result in a cost disbenefit; however, bulk electricity pricing in southern Arkansas is favorable (less than 6 cents per kilowatt hour), and hence results in overall lower-than-normal operating costs.
In its notes that summarize operating costs, Standard Lithium assumes hiring 75 full-time equivalent positions.
The company ran estimates for the pricing of its battery-quality lithium hydroxide based on current prices of $14,500 a ton, adjusted for inflation to the possible start of production in 2025.
“The resource present in the Smackover Formation below the SWA Lithium Project was updated based on the proposed unitized area encompassing 36,172 gross mineral acres (14,638 gross mineral hectares). Using a cut-off criteria of 50 mg/L lithium, the SWA Lithium Project resource estimate is classified as ‘Inferred’ according to the CIM definition standards. The total (global) in-situ Inferred lithium brine resource is estimated at 225,000 tons of elemental lithium, or 1,195,000 tons lithium carbonate equivalent.
“With respect to reconciliation of resources, the updated 2021 SWA Lithium Project resource is 49% larger than the 2019 resource estimate. This difference is directly related to unitization of the resource area,” the Standard Lithium report said.
The report said the brine resource area has some localized oil and gas, and where brine is produced as a by-product of hydrocarbon extraction.
“The data used to estimate and model the resource were gathered from existing and suspended oil and gas production wells on or adjacent to the Project.
“The resource area is split into the northern and southern resource zones, where a fault system is generally interpreted to act as the divide between the two areas (although there is hydrogeological continuity in the resource zone across the fault system). In general, the Smackover Formation is slightly thinner, with lower lithium grades in the northern zone, and slightly thicker with higher lithium grades in the southern zone,” the report said.
The company used extensive available data from wells previously drilled in the area to develop its production estimates.
“The principal recommendation from the PEA is that the project progress to a Pre-Feasibility Study,” the report concludes.
The report makes no mention of another product that is most associated with South Arkansas brine fields – the production of bromine and related chemicals. At its Union County demonstration plant, Standard Lithium takes in brine that’s already had bromine extracted by its partner, Germany-based Lanxess.
In Columbia and Union counties, Albemarle Corporation operates extensive brine fields for the production of bromine and, potentially, lithium. Albemarle officials have said they’re watching what Standard Lithium and Lanxess are doing, but that the corporation has no immediate plans to extract lithium in South Arkansas.
Ironically, Albemarle is a leading lithium producer but uses different processes at facilities in the Western United States, Chile, Australia and China.
Yet another company, Galvanic Energy of Oklahoma City, is working through its Saltwerx subsidiary to lease potential brine field acreage in Columbia and Lafayette counties across a 100,000-acre footprint. It is leasing land generally south of the Tetra leases, and west of Albemarle leases. Galvanic CEO Brent Wilson said development of lithium is the company’s primary interest, but that it might also explore bromine production.