Trafigura inks 10-year lithium deal with Smackover

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

Smackover Lithium, a joint venture between Standard Lithium (TSX-V, NYSE: SLI) and Norway’s Equinor (NYSE: EQNR), will supply Trafigura with 8,000 tonnes a year of lithium carbonate over a ten-year period, totalling 80,000 tonnes.

The SWA project targets initial production of 22,500 tonnes a year of battery-grade lithium carbonate in its first pahse, with potential for future expansion. The Trafigura agreement covers more than 40% of that targeted volume.

Smackover Lithium aims to make a final investment decision this year and start production in 2028.

The project will use direct lithium extraction technology to recover lithium from brine resources in the Smackover Formation in southern Arkansas.

Trafigura said the agreement supports the development of domestic supply of a critical mineral widely used in battery manufacturing and emerging technologies.

“We are pleased to have signed this offtake agreement with Smackover Lithium, further strengthening our North American critical minerals footprint,” said Gonzalo De Olazaval, Trafigura’s head of metals and minerals.

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

Demand-supply gap

Standard Lithium chief executive officer David Park said the agreement marks a key step as the project advances toward development.

“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 in new capacity.