ExxonMobil joined major lithium producers this week in reiterating its optimistic outlook for long-term lithium demand, despite the current market downturn and the recent drop in the price of the metal, which is important for the energy transition.
Lithium prices have plummeted in recent months due to rising inventories and slowing growth in electric vehicle sales. Lithium producers said earlier this year that the current low-price environment was “unsustainable” and could hamper investment in new supplies.
However, all lithium producers, including the world’s largest company Albemarle, are optimistic about the long-term prospects of the important battery metal.
Last year, oil giant Exxon also announced plans to produce lithium in Arkansas and become a leading supplier of batteries for electric vehicles by 2030. Despite the pessimistic short-term market outlook, the company is optimistic about the long-term demand for electric vehicles and lithium.
“What we are seeing right now in lithium is a pessimistic mood,” said Patrick Howarth, global business manager for lithium at Exxon, in an interview with Bloomberg on the sidelines of the Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas.
“However, this is due to increasing demand for electric vehicles and the lithium-ion batteries they contain,” Howarth said.
“We know that the world urgently needs significantly more lithium than it produces today.”
As part of the energy transition, Exxon is taking a safety measure with a project to extract lithium from underground saltwater deposits in southwest Arkansas. The company will process it on site into a battery-grade material.
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In November, the oil giant announced that it had begun drilling its first lithium well in Arkansas and said its goal was to become a leader in electric vehicles by 2030.
Exxon plans to begin producing lithium in 2027 and is also exploring global growth opportunities. By 2030, ExxonMobil aims to produce enough lithium to meet the production needs of more than one million electric vehicles per year. The company is in ongoing discussions with potential customers, including electric vehicle and battery manufacturers.
This week, Exxon signed a non-binding letter of intent with South Korean electric vehicle battery developer SK On that could pave the way to a multi-year offtake agreement for up to 100,000 tons of Mobil lithium from the company’s first planned project in Arkansas. SK On plans to use the lithium in its electric vehicle battery manufacturing operations in the U.S. SK On currently operates two battery factories in Commerce, Georgia, and is building four more factories in joint ventures with Ford Motor Co. and Hyundai Motor Group.
“The world needs more lithium to support its emissions goals, and we are doing our part to advance solutions in the United States,” said Dan Ammann, President of ExxonMobil Low Carbon Solutions, commenting on the agreement.
Exxon touts two strengths of its future lithium offering.
First, the drilling technologies and capabilities for extracting lithium from deep brines like those in Arkansas are very similar to those the supermajor has used in its oil and gas business for decades. Second, Exxon also has a long and rich history of close technical partnerships with the automotive industry.
Nevertheless, Exxon is convinced that its core oil business will be needed in the automotive industry for many years to come.
With the number of electric vehicles growing, the world will “still need internal combustion engine vehicles for years to come,” Exxon’s Howarth told Bloomberg.
“So I think our lithium business and our oil business can coexist.”
Despite the recent collapse in lithium prices, Exxon and major lithium producers remain optimistic about the long-term prospects for the important mineral. Exxon is focused on the long-term fundamentals that are bullish for lithium suppliers, Howarth said at the Las Vegas conference.
“We are really focusing on the fundamentals of the underlying business,” the manager noted.
“Low prices do not deter us, high prices do not attract us.”
By Tsvetana Paraskova for Oilprice.com
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