Exxon has secured rights to approximately 120,000 acres in the Smackover formation in southern Arkansas with the goal of beginning lithium production by 2027, the company said in a press release. Its goal is to establish itself as a "leading supplier for electric vehicles by 2030."
The move into lithium production aligns with a broader trend among oil and gas companies, as they seek to enter the lithium market, capitalizing on the growing demand for energy storage and reducing their exposure to diminishing gasoline and diesel demand in the future.
“Lithium is essential to the energy transition, and ExxonMobil has a leading role to play in paving the way for electrification,” Dan Ammann, president of Exxon’s Low Carbon Solutions division, said in the statement.
Exxon has engaged in discussions with prominent automakers like Tesla, Ford, and Volkswagen, as it endeavors to build a business centered around lithium, according to reports from Bloomberg News earlier this year.
While lithium is not geologically scarce like other battery metals such as cobalt and nickel, extracting it in substantial quantities at scale remains a significant challenge. Exxon's CEO, Darren Woods, has proposed the possibility of extracting lithium from saltwater sources, which could be a more cost-effective and environmentally friendly alternative to traditional mining.
Though these efforts are in their early stages, Exxon believes that its expertise in drilling and processing liquids could provide a competitive edge in accessing lithium from underground saltwater deposits. The potential for lithium production from the Smackover Range in Arkansas is looking increasingly promising, according to Woods.
Although spot lithium prices have faced setbacks this year due to factors like a slowdown in China and concerns about the affordability of electric vehicles in the US and Europe, the long-term outlook for lithium demand remains robust. BloombergNEF anticipates nearly a fivefold increase in global demand for lithium by the end of the decade.
Occidental Petroleum Corp. and SLB, the world's largest oil-services provider, are also exploring brine-based lithium production, indicating a broader industry interest in this emerging market.
Source: Bloomberg
