ExxonMobil and EV battery maker SK On sign MOU regarding U.S. produced Mobil™ Lithium

Rhea-AI Summary

ExxonMobil (NYSE: XOM) has signed a non-binding memorandum of understanding (MOU) with SK On to potentially supply up to 100,000 metric tons of Mobil™ Lithium for U.S.-based EV battery manufacturing. This agreement aims to boost domestic lithium production and supports energy security, U.S. manufacturing jobs, and reduced carbon emissions. The lithium will come from ExxonMobil's project in Arkansas, which uses Direct Lithium Extraction (DLE) technology. This partnership aligns with ExxonMobil's goal to supply lithium for about one million EV batteries annually by 2030. SK On's U.S. plants, including two in Georgia and four upcoming facilities, are expected to reach an annual production capacity of over 180 GWh post-2025, enough to power approximately 1.7 million EVs.

Positive

• ExxonMobil's partnership with SK On may secure a multiyear supply agreement for up to 100,000 metric tons of Mobil™ Lithium.
• The agreement supports U.S. energy security and reduces carbon emissions.
• ExxonMobil's project in Arkansas employs efficient, lower-impact Direct Lithium Extraction (DLE) technology.
• SK On's U.S. battery plants are expected to achieve a 180 GWh annual production capacity post-2025, powering about 1.7 million EVs.
• This collaboration is a step towards ExxonMobil's goal to supply lithium for one million EV batteries annually by 2030.

Negative

• None.

Insights

Financial Analyst

The memorandum of understanding (MOU) between ExxonMobil and SK On could have substantial implications for both companies in terms of revenue streams and market positioning. From a financial perspective, securing up to 100,000 metric tons of lithium for EV battery manufacturing is a forward-looking move that aligns with the rising global demand for lithium, estimated to grow sharply in the coming years. ExxonMobil's projected supply for one million EV batteries annually by 2030 provides a long-term growth narrative that may bolster investor confidence, potentially enhancing the company’s stock valuation. The partnership also helps ExxonMobil diversify its revenue sources beyond traditional oil and gas, which is strategic amid a global shift toward renewable energy.

However, it's worth noting that this MOU is non-binding, which means it's not guaranteed to result in a finalized deal. Investors should stay cautious until more concrete agreements are announced. Additionally, while the approach of using Direct Lithium Extraction (DLE) technology is promising, it is still relatively new and must be proven at scale. Any hiccups in this process could pose risks. On the other hand, if successful, this technology could set a new industry standard.

Market Research Analyst

This collaboration between ExxonMobil and SK On signifies a significant step in fortifying the U.S. EV supply chain, a critical factor as the nation aims to boost its production capabilities in electric vehicle technologies. The domestic sourcing of lithium not only enhances energy security but also reduces dependency on foreign raw materials, which have been subject to supply chain disruptions and geopolitical tensions. For retail investors, this presents a strategic opportunity, as companies that can secure stable and efficient supply chains are likely to perform better in the long run.

Furthermore, the emphasis on domestic production supports U.S. manufacturing jobs and aligns with broader governmental goals of reducing carbon emissions, which could result in favorable regulatory conditions for these companies. This positions ExxonMobil and SK On favorably in both the market and regulatory environment, potentially translating to a competitive advantage. However, investors should monitor the execution of this project closely, given its reliance on new extraction technologies and the evolving regulatory landscape around EV batteries.

Tech Expert

From a technological standpoint, the use of Direct Lithium Extraction (DLE) technology in the planned Arkansas project presents a groundbreaking shift in how lithium can be sourced more efficiently and with reduced environmental impacts compared to traditional hard rock mining. The DLE technology operates by extracting lithium from underground saltwater deposits, which could significantly lower production costs and environmental footprint, making it a more sustainable option for the growing demand in EV battery production.

This innovative approach not only underscores ExxonMobil's capability in leveraging its existing expertise in subsurface exploration and chemical processing but also sets a precedent for the industry. If this technology proves to be scalable, it could open up new avenues for lithium production globally, potentially making the U.S. a leading player in the EV battery market. However, the scalability and commercial viability of DLE technology are still to be fully demonstrated and any technological challenges could delay the project's benefits.

SK On seeking multiyear supply, up to 100,000 metric tons, of lithium from ExxonMobil for U.S.-based EV battery manufacturing

• Agreement signals demand for domestically sourced Mobil™ Lithium and marks a milestone in building out U.S. electric vehicle and battery supply chains
• Domestic lithium production contributes to energy security, supports U.S. manufacturing jobs and reduces carbon emissions

SPRING, Texas--(BUSINESS WIRE)-- ExxonMobil (NYSE: XOM) has signed a non-binding memorandum of understanding (MOU) with SK On, a global leading electric vehicle (EV) battery developer, that opens the door to secure a multiyear offtake agreement of up to 100,000 metric tons of Mobil™ Lithium from the company’s first planned project in Arkansas. SK On plans to use the lithium in its EV battery manufacturing operations in the U.S. This will contribute to ExxonMobil’s goal, announced in late 2023, of supplying lithium for about one million EV batteries annually by 2030 and support the build out of a U.S. EV supply chain.

Demand for lithium is forecasted to grow sharply in coming years as it is an essential component for EVs, consumer electronics, energy storage systems, and other clean energy technologies. The planned project will extract lithium from underground saltwater deposits and convert it into battery-grade material onsite in Arkansas. This approach aims to produce lithium more efficiently and with fewer environmental impacts than traditional hard rock mining.

“The world needs more lithium to support its emissions goals, and we're doing our part to drive solutions forward in the United States,” said Dan Ammann, President of ExxonMobil Low Carbon Solutions. “This collaboration with SK On demonstrates the leading role we play in the growing market for domestically sourced lithium, a market that’s advancing energy security and climate objectives, as well as supporting American manufacturing."

Planned production of Mobil™ Lithium will use ExxonMobil's core capabilities in subsurface exploration, drilling, and chemical processing, offering U.S. EV battery manufacturers a more secure, lower-carbon lithium supply option. Through the appraisal drilling program and technology pilot using Direct Lithium Extraction (DLE) technology, ExxonMobil has successfully produced lithium carbonate from the Smackover formation in southern Arkansas.

In the U.S., SK On currently operates two battery plants in Commerce, Georgia, and is building four more plants through joint ventures with Ford Motor Co. and Hyundai Motor Group. After 2025, the annual production capacity of SK On in the U.S. alone is expected to reach more than 180 GWh, which is enough to power about 1.7 million EVs a year.

“SK On has been working with global partners to secure key battery raw materials in a move to support our growing U.S. manufacturing base and lead electrification in the region,” said Park Jong-jin, Executive Vice President of Strategic Procurement at SK On. “Through this partnership with ExxonMobil, we will continue strengthening battery supply chains in the U.S.”

About ExxonMobil

ExxonMobil, one of the largest publicly traded international energy and petrochemical companies, creates solutions that improve quality of life and meet society’s evolving needs.

The corporation’s primary businesses - Upstream, Product Solutions and Low Carbon Solutions – provide products that enable modern life, including energy, chemicals, lubricants, and lower emissions technologies. ExxonMobil holds an industry-leading portfolio of resources, and is one of the largest integrated fuels, lubricants, and chemical companies in the world. ExxonMobil also owns and operates the largest CO2 pipeline network in the United States. In 2021, ExxonMobil announced Scope 1 and 2 greenhouse gas emission-reduction plans for 2030 for operated assets, compared to 2016 levels. The plans are to achieve a 20-30% reduction in corporate-wide greenhouse gas intensity; a 40-50% reduction in greenhouse gas intensity of upstream operations; a 70-80% reduction in corporate-wide methane intensity; and a 60-70% reduction in corporate-wide flaring intensity.

With advancements in technology and the support of clear and consistent government policies, ExxonMobil aims to achieve net-zero Scope 1 and 2 greenhouse gas emissions from its operated assets by 2050. To learn more, visit exxonmobil.com and ExxonMobil’s Advancing Climate Solutions.

Follow us on LinkedIn.

Cautionary Statement

Statements of future events, investments, or partnerships in this release are forward-looking statements. Actual future results, including project plans, partner participation, timing, capacities, and costs could differ materially depending on a number of factors including the ability to execute operational objectives on a timely and successful basis; implementation of government frameworks and permitting for carbon capture and storage, hydrogen, ammonia and other lower-emission technologies; timely completion of construction projects; commercial and consumer interest in lower-emissions opportunities; changes in plans or objectives prior to final funding decisions or project startups; unforeseen technical or operational difficulties; and other factors discussed under the heading Factors Affecting Future Results in the Investors section of our website at www.exxonmobil.com. Any forward-looking statement speaks only as of the date of this press release and the companies named herein disclaim any obligation to update any forward-looking statement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240624739385/en/

Media Relations

(737) 272-1452

Source: Exxon Mobil Corporation

FAQ

What is the significance of ExxonMobil's MOU with SK On?

ExxonMobil's MOU with SK On could secure a multiyear supply of up to 100,000 metric tons of Mobil™ Lithium for U.S. EV battery manufacturing, enhancing domestic lithium production, energy security, and reducing carbon emissions.

How will the MOU between ExxonMobil and SK On impact the U.S. EV battery supply chain?

The MOU aims to strengthen the U.S. EV battery supply chain by providing a secure, lower-carbon lithium supply from ExxonMobil's Arkansas project, supporting U.S. manufacturing and energy security.

What are ExxonMobil's lithium production goals?

By 2030, ExxonMobil aims to supply lithium for about one million EV batteries annually, contributing to the growing demand for electric vehicle components.

Where will ExxonMobil source its lithium for the agreement with SK On?

ExxonMobil plans to source the lithium from its project in Arkansas, which utilizes Direct Lithium Extraction (DLE) technology.

What technology will ExxonMobil use for lithium production in Arkansas?

ExxonMobil will use Direct Lithium Extraction (DLE) technology to efficiently produce battery-grade lithium from underground saltwater deposits in Arkansas.

What is the production capacity of SK On's U.S. battery plants?

Post-2025, SK On's U.S. battery plants are expected to have an annual production capacity exceeding 180 GWh, sufficient to power approximately 1.7 million EVs.