Lawmakers to debate lithium mining in 2027 session
By Gaven Wallace, RHCJC | Originally published by Mississippi Today
Mississippi lawmakers are expected to debate taxes and regulations around lithium in the 2027 legislative session, determining whether the state becomes a major producer of the mineral critical to battery production.
The Mississippi Development Authority published a report in May arguing Mississippi has the potential to engage in large-scale lithium production, but lawmakers have yet to decide taxes, incentives and environmental regulations for the companies that could develop the industry.
The state sits atop the Smackover Formation, a large swath of porous rock that contains mineral-rich solutions known as brines. Companies would pump mineral-rich brine from underground, remove the lithium using a process called direct lithium extraction, or DLE, and then return the remaining brine to the water table.
Tim Palmer, a geologist at the Mississippi Department of Environmental Quality, used coffee as a way to compare DLE with solar evaporation, a more traditional method of lithium production.
“I can take my coffee, I can run it through a system and it’ll concentrate the coffee — that’s what DLE does,” Palmer said. “Whereas (with evaporation) I’d have to take a bunch of coffee and impound it at the surface… and you have to wait for it to concentrate.”
Lithium — a key mineral in rechargeable batteries used for electric vehicles, consumer electronics and some military technologies — is labeled a critical mineral by the U.S. Department of the Interior. The majority of lithium used in the U.S. is shipped from overseas, largely from China, so domestic production is seen by state and federal leaders as both an economic boon and a matter of national security.
“This is really not only an economic opportunity for Mississippi, it’s an opportunity for Mississippi to help once again provide for our nation’s defense,” Gov. Tate Reeves said at an Aug. 5 news conference.
Domestically, lithium could serve as a large source of revenue. Mississippi Development Authority Executive Director Bill Cork told the crowd at the 2026 Mississippi Natural Resources Summit that lithium extraction’s potential economic benefits for the state should be a key part of the narrative that the project’s champions tell.
“Mississippi can make some money to help the real problems we have,” Cork said. “Things like intergenerational poverty, rural health care and a number of other things.”
Whether lithium production becomes more profitable in Mississippi will depend partly on market conditions and state policy.
With ongoing volatility in lithium prices, as well as high startup costs for DLE projects, the MDA suggests creating financial incentives to attract lithium companies. Among its proposals are a 2.5% royalty that scales down if prices decrease and a six-year holiday on severance taxes and royalties that companies pay to the state and county upon extraction for the industry’s pilot companies.
While potentially attracting industry, concerns around similar domestic lithium projects suggest that financial incentives for companies may increase the burden of risk that Mississippians bear. Groups critical of lithium extraction argue state legislators should consider severance taxes based on revenue to protect communities from the economic uncertainty around lithium as the industry develops.
Arkansas, which also sits atop the Smackover Formation, adopted a different tax model in 2025. The state does not have a distinct tax on lithium but taxes $2.75 per 1,000 barrels of saltwater or brine extracted, a tax model that does not scale with industry revenue. Critics there argue the relatively low tax rate leaves the state vulnerable if lithium prices decline.
Mississippi already levies severance taxes on resources such as oil, natural gas and timber, but state law does not establish one for lithium production.
Reeves indicated at a recent news conference that he wants no severance tax on lithium in Mississippi.
“I’m okay if we don’t tax it because I believe pretty strongly if you want more of something, you tax it less,” Reeves said. “I’m sure there will be a debate and discussion about specific severance taxes if and when the legislature comes in, but zero is okay with me.”
The environmental impact of lithium mining in the state also depends on legislative guidance. DLE is an umbrella term for several technologies that extract lithium and other metal ions directly from brine, greatly reducing land use, water use and carbon dioxide emissions compared with traditional extraction methods. However, researchers at Columbia University argue that more research is needed to determine how DLE affects freshwater resources.
Different DLE technologies have different environmental impacts.
Palmer said he expects Mississippi to use a variety of DLE processes, and the decision on which process to use would be left to industry partners.
“These decisions are made by industry because it’s all about economics, and so, Mississippi isn’t going to tell industry what process to use,” Palmer said. “These are very expensive things to do. … whatever is the most cost-effective process, that’s what’s going to be applied.”
Palmer said it is important to begin domestic lithium extraction now.
“Understanding (how to extract lithium) is a problem for 2026,” Palmer said. “But it’ll take 100 years if we don’t start trying to figure out how we actually take metals out of solutions.”
The Mississippi Development Authority indicated that clarifying laws, acquiring data and creating economic incentives for companies are the three major pillars for beginning lithium production in the state.
This article was originally published by Mississippi Today and is republished here under a Creative Commons license.
Source: Original Article
