Exxon will begin lithium production, fueling demand for batteries

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ExxonMobil plans to start lithium production at a major strategic hub in 2027, the biggest Western oil producer is betting it can use its expertise in drilling and processing to become a leading player in the battery metal.

The company said on Monday it has begun extracting lithium from underground brine in the southern US state of Arkansas, where it has acquired rights to 120,000 acres in the Smackover formation.

“We think we’re going to build a long-term profitable and high-growth business here. So it’s a big deal,” said Dan Ammann, president of Exxon’s low-carbon solutions business, adding that the project builds on the company’s “existing knowledge.”

“We drill wells 10,000 feet underground in these salt water reservoirs. That’s obviously directly in our wheelhouse and capabilities,” Amman said in an interview with the Financial Times.

The move comes as the energy transition increases demand for battery metal. The International Energy Agency predicts that consumption will increase more than 40-fold between 2020 and 2040, on the back of rapid growth in the use of lithium-ion batteries for electric vehicles and energy storage.

Exxon — which has faced criticism that its low-carbon spending dwarfs future oil and gas production — did not say exactly how much it would invest in the new business, branded Mobil Lithium. Amman said the investment “will add up to billions over time.”

Last month, the company announced a $60 billion deal to buy Pioneer Natural Resources, Texas’ largest oil producer, in what analysts describe as a doubling down on fossil fuels.

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Exxon’s switch to lithium was first made by the oil supermajor. Koch Industries, Occidental Petroleum and Norway’s Equinar are exploring the move to battery metal.

The company is betting that its expertise in drilling, pumping and processing oil and gas will give it a competitive advantage in lithium produced from salty brine.

While European oil majors including BP and Shell have built significant wind and solar businesses, Exxon and US rival Chevron have resisted calls to move into renewables.

Instead, any clean energy spending they’ve made has focused on technologies more closely related to their traditional businesses.

“From the beginning, we’ve been focused on what I would call the molecular side of the equation — on carbon capture and hydrogen and biofuels,” Exxon Chief Executive Darren Woods told analysts recently.

“Lithium — and lithium production from brine — is . . . really an extension of our current capabilities upstream.”

Income from lithium projects is higher than renewables and more in line with oil and gas.

Most lithium today is extracted by mining and crushing ore-bearing rocks – mostly in Australia – or by extracting brine from underground reservoirs and using large ponds to separate the lithium by evaporation – mostly in South America.

Exxon plans to use an innovative method known as direct lithium extraction, or DLE, in which it drills into deep saltwater reservoirs, drains the brine, and uses chemical processes before injecting the lithium back underground.

Goldman Sachs said DLE could have a revolutionary impact on lithium production comparable to the US shale boom, accelerating the process from months to days with vastly improved recovery rates versus traditional brine extraction. But it remains unproven at scale.

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Exxon said it plans to begin commercial production by 2027 and ramp up production to enough lithium — or 100,000 tons of lithium carbonate equivalent — to power 1 million electric vehicles by 2030.

Amman said the company aims to compete with the biggest players in the world. “We see this as a huge opportunity and we won’t go into it unless we want to play a major role in it.

Additional reporting by Harry Dempsey in Singapore

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