- Big Oil companies are investing heavily in lithium production in response to soaring demand for the mineral in clean energy technologies.
- China currently dominates the global lithium market, but the West is looking to break its monopoly.
- The U.S. government is supporting domestic lithium production to reduce reliance on China and secure its clean energy future.
Big Oil is quietly investing in the renewable revolution – not through solar and wind power, but through lithium. The ‘white gold’ is an essential ingredient in a laundry list of clean energy technology components, most notably the lithium-ion batteries used in electrical vehicles and for short-term energy storage – an essential stop-gap for variable renewable energy production.
Just last month, ExxonMobil inked a preliminary deal to provide lithium to South Korean electric vehicle battery manufacturer sk On. Just months before that, the firm began drilling for lithium extraction in Arkansas. And according to Exxon insiders, this is just the beginning. ExxonMobil’s Dan Holton recently told the Economist that a “material” part of the $20 billion that the oil supermajor has earmarked for low-carbon investments between 2022 and 2027 will go directly to the lithium sector. “By 2030 the company hopes to produce enough lithium to supply 1m electric vehicles a year,” the Economist reports.
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Though lithium prices have stumbled lately, this dip hasn’t seemed to spook investors, as lithium is expected to generate high rates of return for its investors as clean energy manufacturing giants around the world scramble to shore up supply chains while the green energy transition heats up. The International Renewable Energy Agency (IRENA) estimates that lithium demand for battery-making alone is expected to increase by a factor of ten over the decade between 2020 and 2030. A 2023 report from Popular Mechanics calculated that “an electrified economy in 2030 will likely need anywhere from 250,000 to 450,000 tonnes of lithium.” To put that sum in perspective, “In 2021, the world produced only 105—not 105,000—tonnes.”
Politics aside – money talks. And whether or not Big Oil is ready to give up the ghost of fossil fuels, they are ready to jump into the deep end of lithium production. “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. “We know the world urgently needs significantly more lithium than it’s producing today.”