Exxon Mobil (NYSE:XOM) announced Monday its intention to begin lithium production from subsurface wells by 2027.
This initiative aims to contribute to the supply of this essential metal, widely utilized in electric-car batteries and advanced electronics.
Major oil companies are increasingly venturing into the electrification sector, aligning with government initiatives in the United States and Europe that promote the widespread adoption of electric vehicles and a reduction in fossil-fuel consumption.
Exxon's strategy involves extracting lithium from briny waters sourced from the ground in an area within the state of Arkansas, renowned for its significant lithium deposits. This endeavor is part of Exxon's commitment to fostering a domestic source of the crucial metal.
"In the long term, lithium really is a global opportunity," said Exxon's Low Carbon unit president, Dan Ammann.
"We are starting here because there is an urgent need to ramp up domestic production of these critical materials."
Exxon expects to supply Lithium power to more than 1 million electric vehicles annually, aiming to establish itself as a primary supplier of the metal by 2030.
Analysts from financial firm TD Cowen project that achieving this target would require approximately $2 billion in capital expenditures to produce 50,000 tons of lithium. This level of production could potentially yield $800 million in cash.
The company said it would use conventional oil and gas drilling methods to access lithium-rich saltwater from reservoirs about 10,000 feet underground and then use direct lithium extraction (DLE) technology to separate lithium from the saltwater.
Exxon intends to begin production in collaboration with its partner, Tetra Technologies (NYSE:TTI). It will produce the metal onsite and sell it under the brand name Mobil Lithium, the company said on Monday.
Shares of XOM are up 0.89% in afternoon trading on Monday.