OPINION:
The global demand for lithium continues to surge, largely due to the market for electric vehicles. That makes the recent discovery of lithium reserves in southwest Arkansas particularly fortuitous since it may also enable us to reshape the balance of power in global mineral markets and reduce the vulnerability of the U.S. to Chinese market manipulation.
Lithium has become an indispensable component across the modern economy, and not just in the production of batteries for EVs. Such batteries are critical for storing energy from renewable sources — solar, for example — and providing portable power for electronic devices. Hence, lithium’s nickname “white gold.” In fact, it’s become such a valuable resource that the International Energy Agency reported a roughly 40% increase in global lithium demand by 2040.
Yet the U.S. has remained vulnerable because of its significant dependence on China for lithium. China, a nation known for leveraging supply chains as geopolitical weapons, controls 70% of lithium-ion battery production and is the dominant supplier of lithium despite having less than 7% of the world’s lithium reserves.
This allows China to employ oversupply strategies that undercut competitors, threatening the viability of non-Chinese lithium producers and perpetuating American reliance on China’s supply chains. While this reliance has been acknowledged as a threat to our economy and broader national security, few efforts have succeeded in meaningfully reducing the United States’ dependence on China.
Enter Arkansas.
A few weeks ago, a U.S. Geological Survey-led study unearthed a massive deposit of lithium in the Smackover region of Arkansas. It contains between 5 million and 19 million tons of lithium, which alone outnumbers China’s lithium reserves totaling approximately 3 million tons.
Even with far less lithium, China maintains a stranglehold on the supply because it realized early on the future demand for lithium and began investing heavily in establishing plants in countries such as Chile, investing over $220 million in production efforts. The Arkansas reserve would meet not just today’s demand for lithium in car batteries but the increased world demand projected in 2030 — nine times over.
In addition, the discovery has sparked a flurry of activity and investment in the region, with several companies vying to tap into what’s potentially the largest lithium production site in North America. Standard Lithium, a leading company in the extraction of lithium, in partnership with the German chemical company Lanxess, has been operating a demonstration plant in El Dorado, Arkansas, since 2020. The plant has successfully extracted lithium from brine previously and has already begun pilot operations since the Smackover Formation discovery, signaling the region’s potential to anchor an emergent lithium boom.
With a state lithium royalty battle underway, Arkansas has much to gain from this discovery. As a cornerstone of the nation’s lithium supply, there’s potential for significant job creation, increased state revenue and a bolstered state economy.
Even so, the implications of this lithium boom extend far beyond Arkansas. The investment in the state also addresses the broader geopolitical imperative of countering China’s strategic dominance.
As Sen. Tom Cotton, Arkansas Republican and now one of the most influential lawmakers in the Capitol, said: “The demand for lithium is only going to increase. America needs more lithium production so we’re not reliant on enemy countries like China, that produces so much of the world’s lithium and other rare earth elements. I’m very excited for the people of south Arkansas.”
Mr. Cotton’s concerns regarding lithium dependency on adversarial nations such as China reflect broader national security issues associated with military and strategic resilience. For example, lithium-ion batteries are crucial components of military technology, such as drones and fighter jets.
These national security vulnerabilities were outlined by the Interagency Task Force back in 2018 at the behest of an executive order. Should China suddenly wish to restrict certain nations access to lithium, the U.S. would be in poor shape to provide aid and may very well face a its own shortage of defense products.
By localizing and stimulating investment in production in Arkansas, the U.S. can decrease its exposure to supply chain disruptions while strengthening its industrial base. Moreover, the Smackover Formation allows the United States to remove China’s chokehold on the lithium industry and shift the power balance to safeguard national security and interests abroad.
• Wilson Beaver is the policy adviser for defense budgeting at The Heritage Foundation’s Allison Center for National Security. Joel Highfill is a member of Heritage’s Young Leaders Program.
Please read our comment policy before commenting.