Exxon Mobil (XOM.N) announced on Monday its strategic initiative to commence lithium production from subsurface wells by 2027, aiming to become a leading lithium supplier by 2030.
This move is aimed at meeting the rising demand for the essential metal used in electric vehicle (EV) batteries and advanced electronics. The decision reflects a broader trend among major oil companies investing in the electrification sector, spurred by government initiatives promoting electric vehicle adoption and reduced reliance on fossil fuels, according to Reuters.
The oil company disclosed its plan to tap into lithium-rich briny waters in Arkansas, utilizing conventional oil and gas drilling methods to extract lithium from reservoirs approximately 10,000 feet underground. Exxon aims to implement direct lithium extraction (DLE) technology for separating lithium from the saltwater. The company, in partnership with Tetra Technologies (TTI.N), expects to start production and supply lithium for well over 1 million EVs annually.
Dan Ammann, president of Exxon’s Low Carbon business unit, emphasized the global potential of lithium but underscored the urgent need for domestic production of this critical material. Although the company did not disclose specific investment figures or profitability timelines, financial analysts estimate that achieving Exxon’s lithium production goal would require around $2 billion in capital expenditures to provide 50,000 tonnes, potentially generating $800 million in cash.
Exxon’s lithium venture comes after its acquisition of rights to 120,000 gross acres in the lithium-rich Smackover Formation in Arkansas earlier this year. The company intends to market its lithium under the brand name Mobil Lithium.
While European oil rivals BP (BP.L) and Shell (SHEL.L) have invested in EV charging stations, Exxon has ruled out such ventures. Instead, it focuses on supplying lithium for various applications, including EV batteries, consumer electronics, and energy storage systems.