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ExxonMobil joined major lithium producers this week in reiterating a bullish outlook on long-term lithium demand despite the current bearish market and recent price slump of the metal critical for the energy transition.
Lithium prices have crashed in recent months, dragged down by piling inventories amid slowing growth in electric vehicle sales. Lithium producers said earlier this year that the current low-price environment is “unsustainable” and could hold back investments in new supply.
However, all lithium producers, including the world’s largest, Albemarle, are bullish about the long-term prospects of the key battery metal.
Oil supermajor Exxon, which announced last year plans to produce lithium in Arkansas and become a leading EV battery supplier by 2030, is also optimistic about EV and lithium demand in the long term despite the bearish near-term market prospects.
“What we’re seeing right now in lithium is the sentiment is bearish,” Exxon’s Lithium Global Business Manager, Patrick Howarth, told Bloomberg in an interview on the sidelines of the Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas.
“But underlying that is a demand growth story for EVs and the lithium-ion batteries that go into EVs,” Howarth said.
“We know the world urgently needs significantly more lithium than it’s producing today.”
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 onsite into a battery-grade material.
In November, the oil giant said it had started drilling the first lithium well in Arkansas as it aims to be a leading supplier of electric vehicles by 2030.
Exxon targets first lithium production for 2027 and is also evaluating growth opportunities globally. By 2030, ExxonMobil aims to be producing enough lithium to supply the manufacturing needs of more than a million EVs per year. The company is in ongoing 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, which could pave the way to a multi-year offtake agreement of up to 100,000 metric tons of Mobil Lithium from the company’s first planned project in Arkansas. SK On plans to use the lithium in its EV battery manufacturing operations in the United States. SK On currently operates two battery plants in Commerce, Georgia, and is building four more plants through joint ventures with Ford Motor Co. and Hyundai Motor Group.
“The world needs more lithium to support its emissions goals, and we’re doing our part to drive solutions forward in the United States,” Dan Ammann, President of ExxonMobil Low Carbon Solutions, said, commenting on the agreement.
Exxon is touting two strengths in its future lithium offering.
First, the drilling technologies and skills to produce lithium from deep brines like those in Arkansas are very similar to the ones the supermajor has been using for decades in its oil and gas business. Second, Exxon also has a long-standing rich history of deep technical partnerships with the automotive industry.
Still, Exxon believes that its main oil business will be needed in the automotive industry for many more years.
Amid growing EV fleets, the world “also needs ICE vehicles as well for many years to come,” Exxon’s Howarth told Bloomberg.
“So I think our lithium business and oil business can co-exist.”
Despite the recent slump in lithium prices, Exxon and major lithium producers continue to be bullish on the long-term prospects of the critical mineral. Exxon is focused on the long-term fundamentals, which 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’re not scared off by low prices, and we’re not drawn in by high prices.”
