LITHIUM, STEEL AND TOURISM: ARKANSAS’ NEXT BOOM INDUSTRIES

In 1953, Arkansas lawmakers signed off on “The Land of Opportunity” as the official state nickname. Within a few years, future governor Winthrop Rockefeller became the first chair of the Arkansas Industrial Development Commission, now known as the Arkansas Economic Development Commission, and helped attract industry to the state at a level never seen before, transforming the agriculture-based economy by a huge influx of new manufacturers.

Today, the future of Arkansas once again seems ripe with opportunity, thanks in large part to a few up-and-coming boom industries with that same level of transformational potential — lithium, steel and tourism.

LITHIUM

For many, lithium might mean no more than an element on the periodic table, or some may recognize its association with batteries. While lithium is an essential ingredient to the batteries used by electric vehicles and many everyday devices, the material is also the central ingredient of what is already on its way to becoming the most significant boom industry Arkansas has seen in decades.

Much of southern Arkansas straddles the Smackover Formation, a rich collection of natural resources buried beneath the earth that has been utilized ever since Arkansas’ oil boom in the early 1920s. As such, the region has generations of experience and extensive infrastructure for resource extraction, not only drilling for oil but also for the brine extraction needed to produce bromine. Untouched until just recently, however, are some of North America’s largest deposits of highly-concentrated lithium, which are now attracting international attention as demand for lithium grows.

Already, Canada-based Standard Lithium has begun to make significant investments in El Dorado with its Phase 1A project, which will begin operation in 2026 and make use of existing brine wells to single-handedly double the current U.S. lithium production levels.  Not long after those plans made headlines, ExxonMobil acquired the rights to 120,000 gross acres of land in southern Arkansas and announced plans to drill new brine wells. Both companies plan to use direct lithium extraction, a process with far less environmental impact than traditional methods such as evaporation pools and strip mining. Those are only the first projects of what could be many more to come.

In light of the massive potential this formation holds, state, civil and business leaders gathered with industry figures from around the nation and beyond at the inaugural Arkansas Lithium Innovation Summit that took place February in Little Rock.

“I have to admit, for someone from [south Arkansas], the developments of the past few years have come as something of a shock,” said Gov. Sarah Huckabee Sanders during the summit’s opening remarks. “We all knew that towns like El Dorado and Smackover were built by oil and gas, but who knew that our quiet brine and bromine industry had the potential to change the world?”

As Andrew Miller, chief operating officer of Benchmark Mineral Intelligence and one of the summit’s keynote speakers said, lithium is a major piece of the global energy transition. As the world transitions from fossil fuels to renewable energy sources and to possible future sources like nuclear fusion and fission, all of that new energy will need to be stored somewhere.

The International Energy Agency estimates that extraction of lithium will need to be multiplied by 10 by 2050 to meet the necessary storage capacity required to create a net-zero greenhouse gas economy.

“Arkansas has a massive opportunity to play a very strategic role to serve the battery industry but also build out its own links in the battery supply chain,” Miller said. “There are several linked components, [from] taking lithium out of the ground [to] getting lithium into an electric vehicle, and there’s a massive amount of skill, expertise and quality of assets here in Arkansas to really tap into that massive growth opportunity.

Seizing this golden opportunity, however, will not be quite as simple as just putting out an “open for business” sign.

“We urgently need to keep putting capital into these industries because the reality of raw material markets is that they move a hell of a lot slower than electric vehicle markets,” Miller said. “It takes years, if not decades, to bring these assets online.”

Miller estimated that the United States will need to invest some $50 billion into raw material extraction and a further $20 billion into battery processing by 2030 — even a fraction of which could have a huge impact on Arkansas’s economy. Once Arkansas becomes a leader in lithium extraction, it will be a natural location for other downstream processes.

China, meanwhile, is already at least a decade ahead of the U.S. in the lithium battery game, said Bob Gaylen, CEO of Galyen Energy. Gaylen worked for eight years in China to help build CATL, the world’s largest battery manufacturer. In doing so, he studied how China had been so successful and devised a basic strategy by which the U.S. could catch up.

China was able to advance in the field so quickly thanks to government support through tax incentives, extensive private investment, rapid development of technology and the training of a workforce that could meet the necessary levels of quality, he said. Just as the nation tries to mimic those successes, it is no stretch to imagine that Arkansas could move in the same direction to present itself as a natural hub for battery production.

“As we look back in time, in 2023, we’re seeing here in the United States a roughly five to six percent adoption rate where people are buying electric vehicles,” Gaylen said. “Looking out into 2025, we’re more around 12 to 12.5 percent. Looking out further at 2030, we’re at 28 percent, and finally in the year 2040, we’re at 58 percent, so as the adoption of electric vehicles becomes a reality in our country, I think it’s important to understand that we’re just getting started.”

STEEL

Steel production has a long and proud history in the United States. Steel helped build the nation into a global economic power, and America’s overwhelming steel production was a crucial factor in its victory of World War II. While this history is largely focused in old steel belt cities such as Pittsburgh and Cleveland, the glory days are well behind them. In recent years, Arkansas has taken to the stage as a rising star, centered on Mississippi County, which has achieved the distinction of the No. 1 steel producing county in the United States.

Steel is nothing new to Mississippi County. Nucor, the largest steel producer in the United States, set up its first steel mill in the county in 1988 and then a second mill a decade later, and the industry has been a staple there ever since. The last decade, however, and especially the past few years, have seen the industry rapidly expand with plenty of gas left in the tank.

In 2017, the $1.3 billion Big River Steel mill began operations in Osceola. Only a year later, another $1.2 billion expansion was announced, adding some 500 new jobs and doubling the plant’s production. Big River Steel was bought out by U.S. Steel in 2021, and in 2023, U.S. Steel entered a production agreement with General Motors, the largest automaker in the U.S. Many of the growing operations also extend beyond the mere production of raw steel or the recycling of scrap by going a step further to create products closer to their end use.

“Nucor has made some serious expansions,” said Clif Chitwood, president of the Great River Economic Development Foundation, which promotes economic development in the county. “They’ve gone into the roll coating business, which is where you take their steel, make it even thinner than it normally comes from the factory, and then paint or enamel it. It goes into the market for appliances, refrigerators, freezers, washing machines — that type of thing. That’s about 150 jobs. They put in a zinc mill, so they can now zinc their steel, which has huge downstream applications in agriculture.

“Companies associated with them have extended their capacities in specialty fabrication jobs. In all, I think Nucor has probably added 300 jobs in the downstream area. We’ve also had three distributors come in: Arkansas Steel, Ratner Steel and Majestic Steel, who all buy wholesale from both Nucor and U.S. Steel. They each employ around 60 or 70 people, and those have been in the last three or four years.”

Both Nucor and U.S. Steel have made significant recent investments into electrical steel. U.S. Steel completed a $450 million non-grain-oriented electrical steel line just last October that has an expected economic impact of $5.2 billion over a four-year period. This specialized type of steel is crucial for many electromagnetic devices such as motors, making it particularly important to the burgeoning electric vehicle industry and therefore complementary to Arkansas’ future in lithium. Furthermore, its production in Mississippi County is providing for hundreds of jobs.

“U.S. Steel is building an entire new rolled steel mill, which will have additive capacities in both electric and other high-tech steels,” Chitwood said. “That will employ about 1,000 people, and right now there are probably about 3,000 people in Osceola building it, and of course with every one of those expansions ­— say a steel mill hires 1,000 people — there’s going to be support businesses that hire 250 to 300 that will do everything from electricity to plumbing to working on the machines that make the steel.”

The effects of this growth on Mississippi County are hard to overstate. Despite successes in the steel industry, the closure of many manufacturers and the Eaker Air Force Base in the 1980s and ’90s caused a loss of thousands of jobs and residents who left in search of greener pastures. Roughly 30 years later, the county has almost managed to return to those previous levels, while new housing developments have started to appear for the first time in a decade.

Graduates of Arkansas Northeastern College in Blytheville have the highest starting salaries of any higher education institution in the state, and the county has won awards for having one the nation’s most efficient workforce training initiatives.

Well managed growth begets growth and the area still has a great deal of potential, such as sites at the old airbase ripe for aerospace development. Chitwood recently met with a company interested in using waste products from the local steel mills to produce a new product.

“I think that will continue, like when an asteroid becomes a planetoid because it’s gotten big enough that it just starts drawing other chunks of rock,” he said. “I actually do believe that we’re right on the cusp of that starting to happen.”

TOURISM

Arkansas eventually moved on from the Land of Opportunity and these days is known as the Natural State. Opportunities abound for outdoor recreation throughout the state’s forests, mountains, rivers and lakes. Recent years have brought an exciting shift as more and more people from across the country have begun to realize just how much the state has to offer — a shift that the Arkansas Department of Parks, Heritage and Tourism is eager to capitalize on.

The tourism boom began towards the end of the COVID-19 pandemic; after long periods of quarantine and isolation, it should perhaps come as no surprise that so many people turned to a state known for its beautiful outdoors. Economic data from 2022, the first full year after the pandemic, shows the full scale of this influx, with the state experiencing an increase of 17 percent in visitors to a total of 48.3 million, topping 2019 numbers.

The total value of the Arkansas tourism industry was estimated at $9.2 billion in 2022, generating $536 million in state revenue and $216 million in revenue for local and county governments. Additionally, some $24.3 million was collected through the two-percent Tourism Reinvestment Tax, which as the name implies was reinvested directly back into the state’s tourism marketing efforts. In total, tourism tax revenues are equivalent to an additional $866 from every Arkansas household.

These numbers also represent an astounding return on investment; only $5.2 million was spent on media advertisement for the state for the spring and summer seasons in exchange for $424 million in ad-influenced spending over the same period, making for $82 brought in for every dollar spent. In addition to tax revenues, which boost the state and local economies, the tourism industry also supported 68,000 jobs, accounting for nearly four percent of Arkansas’ total employment numbers. Throughout 2023 and into 2024, the state government has been hard at work to keep that hot streak going, and it is not alone.

“Within the tourism industry, we work with a lot of partners,” said Shae Lewis, secretary of the Arkansas Department of Parks, Heritage and Tourism. “We work with municipalities. We work with tourism destinations [and] with destination marketing areas, which are a region or a group that supports the tourism industry.

“We work closely with new attractions, like recently we’ve seen the Arkansas Museum of Fine Arts come onboard with a multimillion-dollar renovation. We’ve seen the U.S. Marshals Museum open in Fort Smith, and those boosts to the tourism economy make a big difference out there. Of course, we’ve seen a large investment within Arkansas State Parks and other recreation areas in connection to the outdoor recreation industry, whether that’s mountain biking, paddling or hiking trails, and those investments have all had a huge impact too.”

The department has also been working closely with the governor’s office as part of the Natural State Initiative led by First Gentleman Bryan Sanders. In December, the group released a report with recommendations to help support the outdoor economy in a wide range of areas. To further promote tourism, these recommendations ranged from sweeping goals like continued brand developments to solidify Arkansas’ position as a premier destination for mountain biking and rock climbing to much simpler matters such as improving the user experience at arkansas.com.

“That report really outlines goals for the division of state parks, as well as the division of tourism,” Lewis said. “For example, our goal within Arkansas State Parks is to really elevate the state park experience. We’re trying to take locations that are well known like Petit Jean, Pinnacle Mountain or Devil’s Den, locations that are already well loved, and looking at what we can do to elevate those experiences and emphasize the opportunities that are already there.”

Such enhancements include major trail expansions at locations like Mississippi River State Park and Queen Wilhelmina State Park, as well as improvements to facilities, particularly restaurants. The latter is a natural choice because, in 2022, food and beverage accounted for more than a quarter of visitor expenditures at 27 percent.

Nor are the outdoors the only draw in the state; the three counties which brought in the most from tourism in 2022 were Pulaski County at $1.9 billion, Benton County at $1 billion and Garland County at $840 million. Each area boasts strong outdoor recreation opportunities, but the municipalities of Little Rock, Bentonville and Hot Springs are significant attractions in their own rights. Here again, the state works closely with local governments to promote and enhance what Arkansas has to offer.

Lewis said what makes Arkansas special is the combination of natural, cultural and historic resources.

“When you combine the opportunity to start off your day on a great mountain bike ride but end your day at a great restaurant in downtown Little Rock, we just offer a complete experience and package for a great time in Arkansas,” Lewis said.