Exxon Mobil joined other major lithium producers this week in reiterating its bullish outlook for long-term demand for lithium, despite the current bear market and recent price declines for the metal crucial to the energy transition.
Lithium prices have fallen sharply in recent months, triggered by inventory buildup amid slowing growth in electric vehicle sales. Lithium producers said earlier this year that the current low price environment was “unsustainable” and could discourage investment in new supply.
But all lithium producers, including Albemarle, the world's largest, are bullish on the key battery metal's long-term prospects.
Oil giant Exxon, which last year announced plans to produce lithium in Arkansas and become a major supplier of EV batteries by 2030, is also optimistic about EVs and lithium demand in the long term, despite a bearish short-term market outlook.
“What we're seeing right now in lithium is bearish sentiment,” Patrick Howarth, Exxon's global business manager for lithium, told Bloomberg in an interview on the sidelines of the Fast Markets Lithium Supply and Battery Raw Materials conference in Las Vegas.
“But the underlying reason for this is the growing demand for EVs and the lithium-ion batteries they use,” Howarth said.
“We know that the world urgently needs much more lithium than it is currently producing.”
In the energy transition, Exxon is hedging its bets with a project to extract lithium from underground saltwater deposits in southwest Arkansas and process it on-site into battery-grade materials.
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In November, the oil giant announced it had begun drilling its first lithium well in Arkansas as it aims to become a major supplier of electric vehicles by 2030.
Exxon is targeting initial lithium production in 2027 and is also evaluating growth opportunities globally. ExxonMobil aims to produce enough lithium to meet the manufacturing demand for more than 1 million EVs per year by 2030. The company continues to be in discussions with potential customers, including EV and battery manufacturers.
This week, Exxon signed a non-binding memorandum of understanding with South Korean EV battery developer SK On Co. that could pave the way for a multi-year deal to offload up to 100,000 tons of Mobillithium from the company's first planned project in Arkansas. SK On Co. plans to use the lithium in its EV battery manufacturing operations in the U.S. SK On Co. currently operates two battery plants in Commerce, Georgia, and is building four more through joint ventures with Ford Motor Co. and Hyundai Motor Group.
“The world needs more lithium to meet emissions reduction goals and we are playing our part to drive the solution in the United States,” Dan Ammann, president of ExxonMobil Low Carbon Solutions, said in a statement about the agreement.
Exxon is touting two strengths for its future lithium product offerings.
First, the drilling techniques and skills required to produce lithium from deep-sea brines like those in Arkansas are very similar to those the mega-giant has used in its oil and gas operations for decades. Second, Exxon also has a long and rich history of close technical collaborations with the auto industry.
Still, Exxon believes its core oil business will be needed by the auto industry for years to come.
Despite the rise of electric vehicles, the world “will still need internal combustion engines for many years to come,” Exxon's Howarth told Bloomberg.
“So I think the lithium business and the oil business can coexist.”
Despite the recent plunge in lithium prices, Exxon and other major lithium producers remain bullish on the critical mineral's long-term prospects. Exxon is focusing on long-term fundamentals that are bullish for lithium suppliers, Howarth said at the Las Vegas conference.
“We're really focused on the fundamentals of the underlying business,” the executive noted.
“We are not intimidated by low prices, nor are we attracted by high prices.”
Article by Tsvetana Paraskova from Oilprice.com
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