Exxon Makes Lithium Play in Lengthy-Time period Wager on EV Demand

The Texas-based oil firm’s entrance into the lithium enterprise, first reported by The Wall Road Journal in Might, is an effort to reposition itself long-term for the arrival of EVs and electrification within the transportation sector, which it dominated for many years as one of many world’s largest gasoline makers. Lithium is a key ingredient in making batteries for EVs, cellphones and laptops.

Exxon’s buy earlier this 12 months of drilling rights on 120,000 acres in southwest Arkansas put it squarely within the heart of a fledgling lithium business figuring out easy methods to profitably scale up expertise that extracts lithium from underground saltwater considerable in defunct oil fields there.

The Journal had reported the transaction got here in at north of $100 million. A guide for the vendor had estimated the prospect may have the equal of 4 million tons of lithium carbonate equal, sufficient to energy 50 million EVs.

On Monday, Exxon hinted at its long-term plan for the primary time. It mentioned it’s drilling its first lithium properly in Arkansas’ Smackover area and plans to begin producing battery-grade lithium by 2027.

The outlook round lithium has shifted prior to now few months.

This 12 months, lithium costs have plunged greater than 60% via early October as new provides have hit the market, and the expansion in EV gross sales has eased, with some automakers slicing costs amid indicators that demand is shedding steam.

Exxon made clear it has an extended horizon.

By the top of the last decade, it expects to provide sufficient lithium to assist the manufacture of greater than 1 million EVs a 12 months, and mentioned it can take a look at the way it may increase globally. Its talks with battery and EV makers are ongoing, it mentioned.

“It’s an ideal instance of how ExxonMobil can improve North American vitality safety, increase provides of a crucial industrial materials, and allow the continued discount of emissions related to transportation,” mentioned Dan Ammann, head of Exxon’s low-carbon enterprise.

Ammann mentioned extracting lithium from brine is extra environmentally pleasant than present strategies in mining. Within the former course of, the saltwater is reinjected into the earth after lithium is extracted.

Making battery-grade materials would require upgrading uncooked lithium in close by processing crops that Exxon and others haven’t but constructed. In July, the Journal reported Exxon deliberate to construct one of many world’s largest lithium-processing amenities within the area, with a capability to provide 75,000 to 100,000 metric tons of lithium a 12 months.

In August, Exxon mentioned it expects light-duty automobile demand for inside combustion fuels will peak round 2025, after which slide all the way down to early-2000s ranges by 2050. It projected EV gross sales globally would climb virtually 25% and lithium demand would quadruple by 2030.

The lithium business, if it continues to develop in southwest Arkansas, is predicted to carry hundreds of jobs to a nook of the state that was in decline for many years after the Eighties oil crash. Hundreds moved away because the area’s oil wells dried up and massive crops closed.

Arkansas Gov. Sarah Huckabee Sanders mentioned her administration would “proceed to chop taxes and slash pink tape” to assist the lithium business. By one estimate, constructing out deliberate lithium amenities in Arkansas would require some 6,000 jobs and north of 1,600 vans by 2028.

Exxon isn’t solely pivoting into the lithium enterprise. In some methods, additionally it is returning to it.

Within the Nineteen Seventies, Exxon performed a key position within the basis of the lithium business. Exxon chemist Stanley Whittingham received a Nobel Prize in 2019 for serving to to develop the lithium ion battery whereas working at Exxon’s company laboratory in Linden, N.J.

Exxon started to fabricate the batteries in 1976, however the market in the end proved too small, so the corporate ceased making the batteries some years later.

On Monday, Exxon mentioned it will name its product Mobil Lithium.

Write to Collin Eaton at [email protected]

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