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U.S. senators, Energy Dept, Permitting Council support

Standard

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Direct lithium extraction (DLE) technology is not yet

commercial

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Standard was targeted by short-sellers but has pivoted

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Standard aims to use DLE technology developed by Koch

Industries

By Ernest Scheyder

LITTLE ROCK, Arkansas, Nov 14 (Reuters) - Standard

Lithium ( SLI ) is getting a boost from Washington as it vies

with Exxon Mobil ( XOM ) to become the first company to produce

lithium in Arkansas, a U.S. state containing one of North

America's largest supplies of the battery metal.

The vote of confidence by multiple parts of the U.S.

government is one of Washington's strongest yet for any lithium

project and shows increasing comfort with the

still-unproven direct lithium extraction (DLE) industry

.

U.S. senators, the Department of Energy and federal permitting

officials have backed Standard this year. U.S. allies are

considering providing debt financing.

Standard had been working to develop its DLE project for more

than seven years, but Exxon in 2023 made a splash with a $100

million investment into Arkansas with aims to be a dominant

player.

Lithium prices have been weak in recent months and Exxon has now

delayed its lithium plans by at least a year. Standard has also

gone slowly, but still aims to push the project forward on its

30,000 Arkansas acres, with first production slated for

2028.

Standard's fortunes have turned since 2022 when its shares

were targeted by a short-seller who claimed its DLE process was

faulty, a claim the company rejected but one that dragged on its

shares nearly 30% in one day.

The claims gained attention in part because no DLE technology

had then or has since worked at commercial scale for any

company, sparking investor angst across the industry.

Standard responded by pivoting its DLE strategy. It now

plans to extract lithium using a process developed by Koch

Industries with a different type of adsorbent material. Koch

became Standard's largest shareholder, and the company hired new

executives and took on Norwegian energy giant Equinor ( EQNR )

as partner for its $1.45 billion project.

"The fact that Standard has gone through multiple iterations (of

its DLE technology) was actually a selling point for us," said

Allison Kennedy Thurmond of Equinor ( EQNR ), which invested in

Standard's Arkansas project last year over California's

lithium-rich Salton Sea region.

Short seller positions in the stock have dropped by more

than 50% since the 2022 report. Five Wall Street analysts now

recommend buying Standard's shares; none recommend selling,

according to the LSEG data.

"We are definitely at a tipping point," David Park,

Standard's CEO, told Reuters. "We very strongly believe that the

DLE tech will work."

In a letter last month, three U.S. senators described

Vancouver-based Standard as having "the only proven direct

lithium extraction (DLE) technology and operations team in the

United States," a strong assertion given the company's multiple

DLE rivals across the country.

"A resilient domestic lithium supply will shield our

military from supply chain disruptions, geopolitical

manipulation and other external threats," three Republican

senators - John Cornyn of Texas and John Boozman and Tom Cotton

of Arkansas - wrote to U.S. Defense Secretary Pete Hegseth.

President Donald Trump has ordered the Defense Department to

rename itself the Department of War, a change that will require

action by Congress.

The senators encouraged Hegseth to fund Standard via a Cold

War-era law known as the Defense Production Act that can unlock

government money for projects tied to national security.

"As with all congressional correspondence, the department

will respond directly to the members," a Pentagon official said

in response to a request for comment.

PRODUCTION PLANS

Arkansas sits atop the Smackover, an underground geological

formation stretching from Florida to Texas filled with salty

brines containing more than 5 million metric tons of lithium,

according to the U.S. Geological Survey. DLE is essential to

removing that lithium.

In January, the Energy Department gave Standard a $225 million

grant to help process lithium from the Smackover for batteries.

The U.S. kept paying out the grant during the government

shutdown, and the company meets weekly with department staff,

said Park, adding that Washington has not asked that the funding

be converted into equity, as it has with Lithium Americas ( LAC )

.

"We couldn't be more confident about the grant," Park said.

The Energy Department did not respond to requests for

comment. The grant requires the company to undertake a

potentially lengthy federal permitting review process. In April,

Trump put Standard on a fast-track permitting list to speed up

that process.

"We can make sure that they stick to that timeline that

we've set up (for Standard) and move it forward," Emily

Domenech, executive director of Trump's Permitting Council, told

Reuters.

Standard expects lithium prices to more than double from

current depressed levels to an average price of $22,000 per

metric ton over the life of the 20-year project. That price

would provide plenty of profit for Standard, which expects its

costs to be $5,924 per metric ton of lithium.

Koch's lithium business was bought earlier this year by

privately held Aquatech, which counts private equity fund

Cerberus as a minority investor. Cerberus co-founder Steve

Feinberg is U.S. deputy defense secretary and is not involved in

Cerberus' operations. Aquatech said it does not believe

Feinberg's role has aided any part of their operation, including

with Standard.

Standard is in final talks with several banks and foreign

governments about funding $1 billion in loans for the project,

Park said, adding that a decision could come within weeks.

The government credit agencies Export Finance Norway, Korea

Trade Insurance Corporation, and Japan's Nippon Export and

Investment Insurance all declined to comment. Korea and Japan

are large cathode manufacturers and thus lithium buyers, and

Equinor's ( EQNR ) largest shareholder is Norway's government.

Arkansas Governor Sarah Huckabee Sanders has thrown her support

behind the nascent industry, including Standard.

"We feel comfortable with the (DLE) technology and how

that's moved forward," said Sanders.