Summary
- Exxon acquired 120,000 acres in Arkansas for potential lithium mining and processing, aiming to produce up to 100,000 tons of processed lithium annually.
- Exxon Mobil (XOM) is exploring strategic partnerships for lithium supply to major EV manufacturers like Ford (F), Tesla (TSLA), and Volkswagen (OTCPK:VWAGY).
- Exxon’s CEO, Darren Woods, mentioned that lithium extraction aligns with the company’s operations, expressing intentions to enter the lithium market.
- Declining lithium prices have contributed to making EVs more affordable, leading to increased EV sales in 2023.
Following areas of strength for an of every 2022, deals of electric vehicles (EVs) have advanced in 2023, and the US is ostensibly the quickest developing business sector on the planet.
That new market reality has obviously had an effect on a portion of the world’s biggest organizations, especially Exxon Mobil (XOM).
Toward the finish of July, news broke that Exxon was investigating vital organizations to supply lithium to a portion of the world’s biggest EV makers, like Portage (F), Tesla (TSLA) and Volkswagen (OTCPK:VWAGY).
This news follows another report that Exxon has gained 120,000 sections of land in Arkansas, with the plan of possibly mining and handling lithium around there. While still in the beginning phases, the office could siphon out as much as 100,000 tons of handled lithium every year.
This piece of Arkansas is seen as decisively significant on the grounds that it falls inside the Smackover Development, which runs from Florida to Texas, and is accepted to be wealthy in saltwater saline solution — the last option of which regularly contains lithium.
On the off chance that Exxon effectively dispatches another U.S.- based lithium activity, that would altogether help homegrown supplies of this critical worldwide asset. Lithium has been fundamentally undersupplied as of late, as EV fabricating has extended quickly all over the planet.
At present, the world’s biggest makers of lithium incorporate Australia, Chile, China, Argentina and Brazil.
Exxon Mobil’s span
As a component of the organization’s Q2 profit call, Chief of Exxon Darren Woods said that “salt water and extricating the lithium is extremely reliable with a great deal of the things that we do in our treatment facilities and compound plants and, as a matter of fact, in a portion of our upstream tasks.”
Exxon hasn’t yet said if it could foster the Arkansas office all alone, or possibly cooperate with another organization that has explicit aptitude in lithium mining/handling.
Exxon’s goal to be a central part in the worldwide lithium market is plainly developing constantly — particularly on the off chance that the long-term oil goliath is as of now conversing with EV producers about future stockpile bargains.
What’s more, Exxon isn’t harming for cash. The organization booked generally $7 billion in benefits during Q2 2023, and has a long history of giving additional capital something to do.
On July 13, Exxon obtained Denbury Inc. (Sanctum) for $4.9 billion. Denbury represents considerable authority in carbon catch, use and capacity (CCS) as well as upgraded oil recuperation. Last year, Exxon likewise procured a half stake in Biojet AS, which is a Norwegian biofuel organization.
Recently, the Money Road Diary detailed that Exxon Mobil was thinking about a takeover of Trailblazer Normal Assets (PXD), an enormous American fracker in the Permian Bowl. Be that as it may, in view of the new Denbury obtaining, the PXD arrangement might have briefly been moved to the sideline.
In light of Exxon’s new introduction to the lithium market, it’s far from impossible the organization might choose to gain a lithium digger/processor sooner or later, too.
With a market capitalization of generally $440 billion, Exxon is the seventeenth biggest organization on the planet and can unquestionably “pay to play” in the lithium area, in the event that it so decides.
Current elements in worldwide lithium market
Exxon has likely been investigating vital options in the lithium area for quite a while, yet may have gotten more serious in 2023 because of the new rectification in lithium costs.
Taking into account the organization’s long history of achievement, the initiative at Exxon is very cognizant that it’s desirable over purchase low and sell high, rather than the other way around.
Lithium costs — alongside the costs of numerous other worldwide wares — spiked during the Coronavirus pandemic, yet have dropped strongly since October of the year before.
From August 2021 to October 2022, lithium costs energized from generally $15,000/ton the entire way to $85,000/ton. Notwithstanding, from October of last year through today, lithium costs have revised by around 55%, and are right now exchanging around $35,000/ton.
The new drop has been credited to a few variables, remembering the new stoppage for the Chinese economy, as well as expanded worldwide supplies of this secret weapon.
China is as of now the biggest market for worldwide EV deals and flaunts the world’s biggest homegrown armada of EVs, with over portion of the world’s electric vehicles as of now domiciled in the Center Realm.
China’s economy had been extending after the nation rejected the greater part of its Coronavirus limitations toward the finish of 2022. In any case, the economy in China has faltered as of late, as assembling action in the nation has consistently debilitated.
Notwithstanding a debilitating Chinese economy, lithium costs have likewise been battling against rising worldwide supplies of this key material. Lithium creation was very restricted only a couple of years prior, yet worldwide limit has extended fundamentally over the most recent two years.
New supplies are coming web-based in China this year, and in the following several years, a few major mines in North America and South America are supposed to come on the web.
Until further notice, declining lithium costs have unquestionably helped make EVs more reasonable, which might be a key explanation deals of EVs keep on ascending in 2023.
Overall. Also, a portion of that decline was without a doubt connected to falling lithium costs.
Like most different items showcases, the organic market elements in the lithium market will keep on driving costs until the end of 2023 and then some. Also, the overall cost of lithium will proceed to intensely impact the amount it expenses to assemble an EV.
