Louisiana lithium industry gets a sales tax rebate. A lawmaker says there's more to come.

Though lithium has not yet been publicly discovered in the north Louisiana Smackover formation, Louisiana is ready for it with a newly minted sales tax rebate, already signed by Gov. Jeff Landry.

Senate Bill 268, authored by State Sen. Stewart Cathey, R-Monroe, gives those who purchase "equipment, machines and other items used in lithium recovery activities" a rebate on the state portion of sales tax paid.

Cathey said the bill will help get the state to the next step. "We're limited in a nonfiscal session," Cathey said in talking about the smaller scope of the state sales tax rebate. "My expectation is that next year we'll see a pretty robust package to further incentivize the production of lithium in the state."

The map indicating the location of the Smackover formation. data from Arkansas Oil and Gas Commission

Lithium, which has been found in the brine wastewater of wells in sections of Arkansas and Texas but not yet in Louisiana, is crucial in the production of batteries in smartphones and electric vehicles and is the chemical the world is now chasing. 

At least one published industry report says the Smackover Formation that extends into north Louisiana may contain enough of the chemical to power 50 million electric vehicles. Lithium has been discovered in the part of the formation in Arkansas.

The Lithos Group, a Canadian company involved in lithium production, says there is the possibility other valuable chemicals and minerals are present in the brine, such as: rubidium, cesium, gallium and platinum group metals, all of which are used in the computer, transportation and energy industries. Those chemicals are in addition to sodium, potassium, magnesium and calcium already known to be present in oil field brine.

Whether lithium or other materials are found in local brine, Skip Peel, a Shreveport-based mineral consultant, said he believes the lithium already discovered in Arkansas and Texas could be an economic boon to north Louisiana.

At the least Peel said he suspects it will generate more flights at Shreveport Regional Airport, more work for experienced oil and gas workers, and possibly more local manufacturing opportunities for the different infrastructure needed for lithium extraction. "The economic impact could be felt widely," he said.

Scientists and engineers working on a variety of retrieval and separation products believe that the U.S. could become the top provider of lithium in the world. Cathey said he wants the state to be ready for more lithium-related movement.

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Cathey wants to see more such projects. "We want to show the world that Louisiana is 'open for business,'" he said. "We are trying to put people to work. I'm looking at anything we can do to incentivize this new business in Louisiana. The Legislature and administration seem receptive to that, and this initial bill received bipartisan support," he confirmed.

The sales tax rebate that will be in effect until Dec. 31, 2025, applies to materials purchased for development, production, operation, storage, processing or transportation of lithium or lithium refined products. It can also be used in the initial development of the project, the drilling of all production, injection and appraisal wells used in connection with the project, the production and extraction of brine in connection with the project, the re-injection of the brine, and any further processing of the extracted lithium, including storage and transportation. The amount available to fund the rebate is capped at $100,000. 

The dean of the Energy Institute at University of Louisiana Lafayette said it makes sense that northwest Louisiana could have actual lithium resources since the chemical has been found in the Smackover formation. Mark Zappi was in Shreveport recently answering lithium-related questions at the Shreveport Geological Society.

There's "not a lot of data, we don't have the data we'd like to have." Zappi said. Zappi said if he was a mineral holder, he would be getting analysis done. "If you have easy access to brine and it's under your control, it's certainly worth your time to check it out. If you get decent hits, verify and verify. There's a constantly growing list of companies claiming to extract lithium from brine."

In terms of royalties for brine, Zappi said Louisiana is late to the game. "Arkansas is much farther along than most. My understanding is that Arkansas has implemented some laws answering the question. Texas is kind of the wild, wild west and Louisiana hasn't even come to the west yet."