A $2 Billion Lithium Deal Puts a Texas Project on the Map
Commodity trader Trafigura agreed to buy lithium from EnergyX, including 30 percent of the first-phase output from its Project Lonestar in East Texas. Production is targeted for 2029.
A lithium startup with operations in Texas has landed its first big customer. Global commodity trader Trafigura has signed a binding 10-year agreement to buy 100,000 metric tons of battery-grade lithium from Energy Exploration Technologies, known as EnergyX, Trafigura announced Oct. 12.
Part of that lithium is supposed to come from Project Lonestar, EnergyX's project in Texas that pulls lithium from underground brine in the Smackover Formation.
The deal
Under the take-or-pay agreement, Trafigura will buy lithium carbonate from EnergyX's Project Black Giant in Antofagasta, Chile, and lithium hydroxide from Project Lonestar. Both companies say Trafigura will take 66 percent of Black Giant's first-phase output and 30 percent of Lonestar's.
Reuters and Mining Weekly put the Texas share a little differently. They reported Trafigura will buy 5,000 metric tons a year of lithium hydroxide, and that EnergyX plans to start Lonestar at 15,000 metric tons a year, which works out to 33 percent. The companies' releases say 30 percent of Phase 1. The gap may come from how Phase 1 output is defined, but neither company has explained it.
EnergyX says the deal is worth more than $2 billion over its term, a company estimate based on current prices of about $20,000 per metric ton. It is the company's first publicly announced offtake agreement.
Mining Weekly reported Trafigura plans to sell the lithium to Chinese customers at first, with a long-term goal of supplying the U.S. battery supply chain once it is built out. Trafigura said in its release that a significant share is expected to go to U.S. battery makers.
The Texas project
EnergyX announced in March that it had commissioned a demonstration plant at Project Lonestar, dated from Hooks, Texas, near Texarkana. The company said the demonstration plant will produce about 250 metric tons a year of battery-grade lithium and is the first direct lithium extraction plant in Texas processing local Smackover brine. EnergyX calls it the largest such plant in the United States.
Commercial production at Lonestar is targeted for 2029, Mining Technology reported. Mining Weekly reported the company plans, by its own estimate, to start at 15,000 metric tons a year of lithium hydroxide in Texas.
Read the fine print
This is a sales contract for a plant that does not exist yet at commercial scale. Mining Weekly reported EnergyX still needs more money to build its Chile and Texas facilities and has applied for a $690 million loan from the U.S. Export-Import Bank. The deal helps that application, but it does not guarantee the plant gets built or that it runs on time. Lithium prices also swing hard, so the $2 billion figure could look very different in a few years.
Why it matters
America depends heavily on other countries for the minerals that go into batteries, phones and defense equipment. Northeast Texas sits on brine that could help change that. As with the high-purity iron project in Conroe, Texas is becoming a place where the raw materials of modern manufacturing get made.
If it works, that means skilled jobs in a part of Texas that could use them. If it does not, investors and lenders will carry the loss. Either way, East Texans deserve straight answers about water use, brine disposal and who pays if things go wrong. Good stewardship of what lies under the ground matters as much as what we build on top of it.
Hero photo: Chemicalinterest via Wikimedia Commons, public domain.
