Big Oil Companies Step into the Lithium Market

BP and Shell, two major UK-based oil companies, have been investing in solar and wind energy projects for quite some time. Their competitors, on the other hand, have primarily focused on oil drilling. This approach has been well-received by investors, as evidenced by the fact that ExxonMobil, an American oil giant that is heavily dedicated to traditional oil extraction, is valued at $510 billion – which is half as much again as the combined value of BP and Shell. ExxonMobil’s stock has seen a significant increase of 50% in the last five years, while Shell’s has only risen by 10% and BP’s has fallen by 13%.

While ExxonMobil does have some interest in renewable energy, it has taken a different approach compared to its competitors. Instead of investing directly in renewable energy generation, the company has opted to make an indirect bet on the energy transition. For example, ExxonMobil recently signed a preliminary agreement to supply lithium to SK On, a South Korean manufacturer whose lithium-ion batteries will be used to power electric vehicles produced by Ford and Hyundai. In addition, the company announced in November that it was drilling its first lithium well in Arkansas. Dan Holton, who oversees ExxonMobil’s low-carbon investment projects, stated that a significant portion of the $20 billion investment between 2022 and 2027 will be allocated to lithium. The company aims to produce enough lithium by 2030 to supply 1 million electric vehicles per year. Darren Woods, the CEO of ExxonMobil, views lithium as a “high-return” opportunity for the company.