Released October 16, 2025 | SUGAR LAND
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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--While there is much discussion about ramping up U.S. lithium production to meet demand for batteries in the small scale--electric vehicles (EVs)--and large scale--battery energy storage systems (BESS)--there are two big headwinds, according to a report by the Federal Reserve Bank of Dallas.
The report, "Rush for U.S. lithium production encounters tough economics," said the market price of lithium is low, making return on investment (ROI) for developers somewhat risky. Supply and demand principles involved in low prices indicate there is more lithium on the market now than is needed.
Second, while purchases of lithium rights in Nevada and in the Smackover Formation crossing the Arkansas-Texas line are making headlines, there is only one active lithium mine in the U.S., and that's in Nevada. The mine extracts lithium-rich brine from underground aquifers and concentrates it in evaporation ponds.
The other established method of extracting lithium is by hard-rock mining of pegmatite rock for minerals such as spodumene.
The Dallas Fed's report evaluated 66 lithium projects at various levels of development. Many are in the top two resource areas, Nevada and the Smackover Formation.
Industrial Info Resources is tracking 94 lithium mining and refining projects in the U.S. totaling $55.6 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for a list of detailed project reports.
Very few U.S. projects can use either of the established methods, said the Dallas Fed. About 70% are looking at alternative methods. "The largest group, comprised of 25 projects, focuses on sedimentary (clay) deposits, primarily in Nevada, where rare geology and environmental conditions yield exceptionally high lithium concentrations in soils and underground brines." The report did not explain the exact methods to be used there.
Direct lithium extraction (DLE), which avoids evaporation ponds, is the plan for 21 projects. Said the Dallas Fed, "The locations involve diverse brine sources: hot, mineral-rich geothermal brines in California, deep underground brines in Nevada and Utah, and produced water, a byproduct of oil and gas wells in shale basins in Pennsylvania, North Dakota and West Texas."
The Smackover, a depleted oilfield which started oil production in the 1920s, is now highly valued for its extremely high concentrations of lithium.
The challenge for DLE operations is that the process is still mostly in the drawing-board phase, having yet to prove itself economically viable.
Operators in the sector are increasingly optimistic about changing that situation, however. Exxon Mobil Corporation (Spring, Texas) said, "Through the appraisal drilling program and technology pilot using Direct Lithium Extraction (DLE) technology, ExxonMobil has successfully produced lithium carbonate from the Smackover formation in southern Arkansas." First production is expected in 2027. For more information, see November 15, 2023, article - ExxonMobil Announces Plans for Lithium Mine in Arkansas.
Similarly, Smackover Lithium (Lewisville, Arkansas) said on October 14 that it expects first production from its holdings by 2028, assuming a construction start in 2026.
Future Stock
Thirty-eight of the projects tracked in the report were still in the exploration phase, meaning it could be 10 years or more before they reach a production phase, the Dallas Fed noted. It added, "Success is uncertain, as the deposit may end up being marginal or market conditions may become unfavorable."
Only three of the 66 projects in the report were in the construction phase.
"The largest, Thacker Pass in Nevada, is an open-pit clay mine, and first-phase production is scheduled to begin in late 2027," according to the report. "At capacity, the first phase will produce about 40,000 tons of lithium annually, sufficient to power about 700,000 to 800,000 electric vehicles."
That alone would increase U.S. production by about 10 times its 2024 level of 4,000 pounds--less than 1% of the world's production.
The other two projects under construction, which are expected to be online in 2026, would combine for about 10,000 tons per annum.
How does the future look? Extraction efficiency and commodity price will be key deciders.
"Growth prospects beyond 2030 will hinge not only on the evolution of lithium prices, currently quite low, but also on the abilities of companies to scale up new technologies and navigate myriad challenges that frequently derail mining projects," the report said.
Industrial Info's Vice President of Research Metals & Minerals Joe Govreau agreed with the Fed's shaky lithium outlook: "The report is spot on that current market conditions are not favorable for many lithium projects."
He added, "A significant bellwether on pricing is the fact that China controls the majority of processing. They took a certain amount of that offline over the past two years due to the depressed market conditions. With plans to bring idled capacity back online, China has a major influence on lithium prices."
A third factor could include government policies such as recent moves by the Trump administration to support critical mineral production, including some lithium funding.
Government policies on the demand side may also factor in. Those could include any changes in requirements for EVs and for non-dispatchable (intermittent) generation sources such as wind and solar, which rely on BESS installations to provide baseline power.
An additional issue is local opposition. Mines in Nevada that require large evaporation ponds have seen local resistance in an arid region already dealing with water shortages, said the report. Noise and pollution are often concerns of neighbors as well.
While U.S. lithium production could flourish, its future will depend on variables both inside--technology and investment--and outside, including demand and government support.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
The report, "Rush for U.S. lithium production encounters tough economics," said the market price of lithium is low, making return on investment (ROI) for developers somewhat risky. Supply and demand principles involved in low prices indicate there is more lithium on the market now than is needed.
Second, while purchases of lithium rights in Nevada and in the Smackover Formation crossing the Arkansas-Texas line are making headlines, there is only one active lithium mine in the U.S., and that's in Nevada. The mine extracts lithium-rich brine from underground aquifers and concentrates it in evaporation ponds.
The other established method of extracting lithium is by hard-rock mining of pegmatite rock for minerals such as spodumene.
The Dallas Fed's report evaluated 66 lithium projects at various levels of development. Many are in the top two resource areas, Nevada and the Smackover Formation.
Industrial Info Resources is tracking 94 lithium mining and refining projects in the U.S. totaling $55.6 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for a list of detailed project reports.
Very few U.S. projects can use either of the established methods, said the Dallas Fed. About 70% are looking at alternative methods. "The largest group, comprised of 25 projects, focuses on sedimentary (clay) deposits, primarily in Nevada, where rare geology and environmental conditions yield exceptionally high lithium concentrations in soils and underground brines." The report did not explain the exact methods to be used there.
Direct lithium extraction (DLE), which avoids evaporation ponds, is the plan for 21 projects. Said the Dallas Fed, "The locations involve diverse brine sources: hot, mineral-rich geothermal brines in California, deep underground brines in Nevada and Utah, and produced water, a byproduct of oil and gas wells in shale basins in Pennsylvania, North Dakota and West Texas."
The Smackover, a depleted oilfield which started oil production in the 1920s, is now highly valued for its extremely high concentrations of lithium.
The challenge for DLE operations is that the process is still mostly in the drawing-board phase, having yet to prove itself economically viable.
Operators in the sector are increasingly optimistic about changing that situation, however. Exxon Mobil Corporation (Spring, Texas) said, "Through the appraisal drilling program and technology pilot using Direct Lithium Extraction (DLE) technology, ExxonMobil has successfully produced lithium carbonate from the Smackover formation in southern Arkansas." First production is expected in 2027. For more information, see November 15, 2023, article - ExxonMobil Announces Plans for Lithium Mine in Arkansas.
Similarly, Smackover Lithium (Lewisville, Arkansas) said on October 14 that it expects first production from its holdings by 2028, assuming a construction start in 2026.
Future Stock
Thirty-eight of the projects tracked in the report were still in the exploration phase, meaning it could be 10 years or more before they reach a production phase, the Dallas Fed noted. It added, "Success is uncertain, as the deposit may end up being marginal or market conditions may become unfavorable."
Only three of the 66 projects in the report were in the construction phase.
"The largest, Thacker Pass in Nevada, is an open-pit clay mine, and first-phase production is scheduled to begin in late 2027," according to the report. "At capacity, the first phase will produce about 40,000 tons of lithium annually, sufficient to power about 700,000 to 800,000 electric vehicles."
That alone would increase U.S. production by about 10 times its 2024 level of 4,000 pounds--less than 1% of the world's production.
The other two projects under construction, which are expected to be online in 2026, would combine for about 10,000 tons per annum.
How does the future look? Extraction efficiency and commodity price will be key deciders.
"Growth prospects beyond 2030 will hinge not only on the evolution of lithium prices, currently quite low, but also on the abilities of companies to scale up new technologies and navigate myriad challenges that frequently derail mining projects," the report said.
Industrial Info's Vice President of Research Metals & Minerals Joe Govreau agreed with the Fed's shaky lithium outlook: "The report is spot on that current market conditions are not favorable for many lithium projects."
He added, "A significant bellwether on pricing is the fact that China controls the majority of processing. They took a certain amount of that offline over the past two years due to the depressed market conditions. With plans to bring idled capacity back online, China has a major influence on lithium prices."
A third factor could include government policies such as recent moves by the Trump administration to support critical mineral production, including some lithium funding.
Government policies on the demand side may also factor in. Those could include any changes in requirements for EVs and for non-dispatchable (intermittent) generation sources such as wind and solar, which rely on BESS installations to provide baseline power.
An additional issue is local opposition. Mines in Nevada that require large evaporation ponds have seen local resistance in an arid region already dealing with water shortages, said the report. Noise and pollution are often concerns of neighbors as well.
While U.S. lithium production could flourish, its future will depend on variables both inside--technology and investment--and outside, including demand and government support.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
