Trafigura inks 10-year lithium deal with Smackover

Commodities trader Trafigura has signed a take-or-pay agreement with Smackover Lithium to purchase battery-grade lithium carbonate from the South West Arkansas (SWA) project in the United States.

Smackover Lithium, a joint venture between Standard Lithium (TSX-V, NYSE: SLI) and Norway’s Equinor (NYSE: EQNR), is to supply Trafigura with 8,000 tonnes a year of lithium carbonate over ten years, totalling 80,000 tonnes. The agreement supports the development of a domestic supply of a critical mineral widely used in battery manufacturing and emerging technologies, Trafigura said.

“The SWA project is expected to provide a reliable source of battery-grade lithium carbonate produced in the United States, enhancing domestic supply chains,” Trafigura’s head of metals and minerals, Gonzalo De Olazaval, said. “We look forward to collaborating with Smackover Lithium on this strategic project and delivering this material to customers across North America and globally.”

The SWA project targets initial production of 22,500 tonnes per year of battery-grade lithium carbonate, with potential for future expansion. Smackover Lithium aims to make a final investment decision this year and start production in 2028. The project is to use direct lithium extraction technology to recover lithium from brine resources in the Smackover Formation in southern Arkansas.

Demand-supply gap

The agreement marks a key step as the project advances toward development, Standard Lithium CEO David Park said.

“The execution of the offtake agreement is the culmination of months of collaboration and negotiation and represents an important step toward a final investment decision and construction,” Park said.

The agreement comes as analysts warn the lithium market could tighten sooner than expected as demand from electric vehicles and energy storage accelerates.

Wood Mackenzie research director Allan Pedersen said demand could exceed 13 million tonnes by 2050 under an accelerated energy transition scenario, more than double base-case projections, with supply deficits emerging as early as 2028 unless the industry invests up to $276 billion (C$375 billion) in new capacity.