Oil and gas giant ExxonMobil is engaging in discussions with major carmakers Tesla, Ford, and Volkswagen, along with other automakers, to secure lithium supply chains as it ventures into the electric vehicle (EV) battery metal business.
Though talks with potential buyers of Exxon’s future lithium supply are still in the early stages, the company’s growing interest in the metals business is evident from these engagements with EV majors.
According to anonymous sources close to the matter, Exxon has also been in conversation with battery giants Samsung and SK On, although no official confirmations have been made by either company.
In May, Exxon made a strategic move by acquiring drilling rights in Arkansas, USA, a region believed to hold significant lithium deposits. The company paid over $100 million to exploration company Galvanic Energy for 120,000 gross acres in the Smackover formation of southern Arkansas.
Several oil majors, including Chevron, Occidental Petroleum Corp, and SLB, the world’s largest oil-services provider, are looking to diversify their operations beyond fossil fuels and capitalize on the surging demand for lithium due to the rapid adoption of EVs.
Global commitments to electric vehicle targets and the phasing-out of combustion engine cars have raised concerns among lithium producers about potential shortages. Delays in mining permits, material shortages, and global inflation are posing challenges in meeting the rapidly increasing demand.
According to presentations at the Fastmarkets Lithium and Battery Raw Materials conference, there were 45 lithium mines operating worldwide in 2022, with 11 more expected to open this year. However, even with an additional seven mines slated for opening in 2024, forecasts suggest that it will still not be sufficient to meet the demand. Experts estimate that the world will require 60 new lithium mines and plants by the end of the decade.
ExxonMobil, as a member of the Oil and Gas Climate Initiative, has allocated a $1 billion investment package to invest in the EV battery space. However, the company has faced criticism from activist shareholders and proxy advisor Glass Lewis, who called for greater action on emissions reductions. In response, Exxon stated that achieving the Paris Agreement’s net-zero emissions target by 2050 is unlikely and should not be a topic in its financial statements going forward.
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