The Houston, Texas based natural gas giant, ExxonMobil has revealed that it is planning on becoming one of the biggest suppliers of lithium for electric vehicles, marking this as the company’s first major foray outside of fossil fuels in decades.
The plan is for Exxon to extract the metal from underground saltwater reservoirs in the Smackover Formation in southern Arkansas in the US, employing a novel method called direct lithium extraction (DLE) not currently deployed at scale, and it is aiming to produce its first lithium by 2027 and ramp up output to the equivalent of a million electric vehicles annually by 2030.
In an interview, Dan Ammann who is the president of Exxon’s Low Carbon Solutions business said that level of production would amount to about 100 000t a year. It would also make Exxon one of the top 10 producers globally.
Exxon is shifting its focus to domestic lithium production in the US, aiming to reduce dependence on imports, especially from China. The company is adopting a new technology called direct lithium extraction (DLE) to mine lithium domestically with a smaller environmental impact. Unlike other battery metals such as cobalt and nickel, lithium isn’t geologically scarce, but extracting it at scale poses challenges.
Exxon believes DLE offers advantages over current methods, including smaller surface-land use. The success of DLE could revolutionize global lithium production, unlocking significant resources in North America and potentially making the process more cost-effective and environmentally friendly than traditional methods in South America, which houses about half of the world’s lithium reserves.
Darren Woods, Exxon’s CEO, expressed confidence in DLE, drawing parallels between the technique and oil pumping. Exxon, which played a crucial role in developing the lithium-ion battery in the 1970s, now aims to capitalize on the growing demand for lithium. The company is evaluating global expansion of lithium production as the market evolves.
While Exxon didn’t provide specific capital expenditure forecasts, the initial lithium module is expected to cost “hundreds of millions” of dollars, with projected spending reaching “billions” by 2030. This ambitious project aligns with Exxon’s strategy to secure a substantial share of the expanding lithium market, anticipating a quadruple growth by 2030. The move also seeks to offset potential losses from the declining demand for petrol and diesel in the coming decades.
Exxon has engaged in discussions with major automakers like Tesla, Ford, and Volkswagen to establish a strong presence in the lithium market. Despite a recent dip in spot lithium prices due to market conditions, long-term projections indicate a healthy growth trajectory. BloombergNEF estimates nearly a fivefold increase in global lithium demand by the end of the decade.
Notably, other players in the energy sector, including Occidental Petroleum and SLB, are also exploring brine-based lithium production, signalling a broader industry shift towards sustainable and domestically sourced lithium.