Oil and gas giant ExxonMobil is in talks with major carmakers Tesla, Ford and Volkswagen, as well as other automakers, about lithium supply chains as the company moves to build a business around the critical electric vehicle (EV) battery metal.
According to reports, talks with potential buyers of Exxon’s future lithium supply are still in the early stages.
The company has yet to outline details for its lithium operations but talks with EV majors signify its growing interest in the metals business.
Reports from anonymous sources close to the matter also say Exxon has been in conversation with battery giants Samsung and SK On, although neither company has confirmed this.
In May, the company bought drilling rights in Arkansas, US, an area of the country believed to be rich in lithium deposits.
Exxon paid more than $100m to the exploration company Galvanic Energy for 120,000 gross acres in the Smackover formation of southern Arkansas.
The purchase comes as several oil majors seek to diversify operations beyond fossil fuels and take advantage of the boom in lithium demand as EV uptake continues to surge.
Chevron, Occidental Petroleum Corp and SLB, the world’s largest oil-services provider, have all signaled interest in entering the lithium extraction business.
Global commitments to EV targets and the phasing-out of combustion engine cars has sparked concerns of shortages among lithium producers, who warn that delays in mining permits, shortages and global inflation may cause difficulties in meeting the rapidly increasing demand.
According to presentations at Fastmarkets Lithium and Battery Raw Materials conference last month, there were 45 lithium mines operating globally in 2022, with a further 11 due to open this year.
An additional seven mines are slated to open in 2024, but even this will not be enough to keep up with demand, forecasts say. Estimates suggest the world will need 60 new lithium mines and plants by the end of the decade.
As a member of the Oil and Gas Climate Initiative, a CEO-led organisation 12 of the largest oil and gas companies, Exxon has created a $1bn investment package to invest in the EV battery space.
Earlier this year, the company faced a black lash from activist shareholders and received a controversy alert from proxy advisor Glass Lewis calling for greater action on emissions reductions.
In response, Exxon said that the Paris Agreement target of net-zero emissions by 2050 is unlikely to be achieved and should not be a future topic in its financial statements.
