A Look at Lithium

A burgeoning energy sector in Arkansas is positioned to provide long-term economic development for the state.

Arkansas Commerce Secretary Hugh McDonald returned in late July from the prestigious Fastmarkets Global Lithium, Battery & Critical Minerals Conference, where he explored possible business opportunities around the lithium play in the Smackover Formation of south Arkansas.

The event, which drew participants from across the globe, took place July 22 to 25 in Las Vegas. McDonald visited with Arkansas Money & Politics about his takeaways from the trip.

Arkansas Money & Politics: How was the conference?

Secretary Hugh McDonald: The Fastmarkets Global Lithium, Battery & Critical Minerals Conference was a great opportunity to share our message that Arkansas is open for business, it has the resources that companies need, it’s ready for investment, and it’s a state that welcomes the lithium industry. During the conference, I had the opportunity to speak with industry executives as part of a roundtable focused on Arkansas’ lithium industry, learning more about their priorities and perspectives. The conference was not only an excellent networking opportunity but a chance to learn about the latest developments in the lithium industry.

Arthur Orduña, president of the Venture Center in Little Rock, also attended and coordinated a new program for the Fastmarkets conference as part of which the latest cohort of companies in the Arkansas Lithium Technology Accelerator participated in a live Shark Tank-like pitch program further highlighting the innovation happening in the industry in Arkansas.

AMP: What can Arkansans expect from the lithium industry over the next five years?

McDonald: Lithium companies are already in Arkansas, making investments and launching pilot projects. In the next five years, we expect to see more investments and more companies enter the space and scale-up operations as companies move from the pilot stage to full production. With the Lithium Learns and Lithium Works programs in place, Arkansas is building a talent pipeline that will be ready to fill the new jobs created by this new industry. We can also expect new businesses to spring up around the industry through programs like the Arkansas Lithium Technology Accelerator.

AMP: Does the lithium play have any similarities to the El Dorado oil boom of the 1920s?

McDonald: It’s hard to say because we’re still in the early stages of the development of an industry around lithium production in southwest Arkansas. Lithium is actually a fairly common mineral, but extracting it and converting it to a lithium hydroxide and lithium carbonate at scale and at a competitive cost is the key. Based on analysis we’ve had done, Arkansas can be competitive on the production-cost curve given the state’s relatively low costs of doing business and low costs of energy.

We believe there is no reason Arkansas couldn’t become a hub for the upstream and midstream lithium battery supply chain, but there are many pieces of the puzzle that have to fall in place for that to happen. One of the most critical components is ensuring the current federal 45X production-cost tax credits remain in place and do not sunset in 2032, and maintaining U.S. tariff policy on China. These instruments are essential to be able to compete with the Chinese lithium-battery industry that has been heavily subsidized for decades.

AMP: Could lithium deliver long-term benefits?

McDonald: As the need for critical minerals continues to rise, southwest Arkansas is well positioned for significant long-term growth. U.S. and global demand is continuing to rise at a rapid pace.

Two major shifts have occurred in the industry lately. One is the shift toward LFP battery chemistry, which has seen significant cost and performance improvements. Many of the gigafactories are therefore converting their manufacturing from NCM to LFP chemistry, which, in turn, support the exponential growth happening in the energy storage markets to support AI data centers. This shift all bodes well for the future Arkansas Smackover lithium-carbonate production.