Little Rock, Arkansas – Governor Sarah Huckabee Sanders announced alongside ExxonMobil and other state leaders that the oil giant will commence drilling for lithium in Arkansas. This marks a significant investment in what could be one of North America’s largest lithium supplies, heralding a major shift in the region’s energy industry.
“South Arkansas is our state’s all-around energy capital, producing oil, natural gas, and now, thanks to investments like ExxonMobil’s and their combination of skills and scale, lithium,” Governor Sanders stated. She emphasized the administration’s commitment to an “all-of-the-above” energy strategy, ensuring high-paying jobs and economic growth in Arkansas.
This initiative by ExxonMobil is expected to boost America’s domestic energy production, positioning Arkansas as a leader in global lithium production. Local leaders, including Sen. John Boozman, Representative Bruce Westerman, and Representative Steve Womack, highlighted the strategic importance of this move. They pointed out that utilizing local resources like lithium will not only create jobs and expand the economy but also reduce dependence on foreign energy sources, contributing to national energy security.
Hugh McDonald, Arkansas Secretary of Commerce, and Clint O’Neal, executive director of the Arkansas Economic Development Commission, welcomed ExxonMobil’s investment. They expressed optimism about the positive impact on South Arkansas’s economy and the potential for community development and job creation.
Earlier reports revealed Exxon’s plans to construct a lithium processing facility near Magnolia, acquiring around 100,000 acres in Columbia County. The extraction process, involving lithium-rich brine from the underground Smackover formation, is pioneering at this scale. Though drilling is starting soon, usable lithium production is projected for 2027, with aims to produce enough lithium for over a million EVs annually by 2030.
ExxonMobil’s venture into lithium production signifies an adaptive approach to the changing energy demands, focusing on a key element essential for the EV market and renewable energy solutions. This move could have far-reaching implications for the lithium market and the broader energy sector.
Market Projections: Lithium Demand and Prices
The global lithium market is witnessing an unprecedented surge, primarily driven by the accelerating adoption of electric vehicles. Lithium prices are expected to remain robust in 2023, supported by a tight supply amid growing demand. Industry experts anticipate that the gap between lithium demand and supply will continue or even widen this year. Prices are projected to stay at current elevated levels for the next few years, despite some normalization of high spot prices being possible.
SQM, a Chilean lithium producer, expects the market to remain tight due to surging EV demand. Platts assessed seaborne lithium carbonate and lithium hydroxide at significantly high prices compared to the start of 2022, reflecting the substantial market growth.
However, there are more conservative views in the Asian market, with over half of the participants in a survey expecting average lithium prices to be lower in 2023. This perspective is influenced by factors like power cuts and pandemic controls in key Chinese producing provinces, along with production cuts by downstream battery makers.
Looking ahead, market sources are divided on whether supply will catch up with demand in 2023. S&P Global Market Intelligence forecasts a slight surplus in the lithium market for 2023, improving from a deficit in 2022. This projection is based on the expected increase in lithium chemical supply and demand.
These market dynamics underscore the strategic importance of ExxonMobil’s investment in lithium production in Arkansas. As the global race for critical minerals intensifies, ExxonMobil’s entry into the lithium market could not only transform the energy landscape of Arkansas but also have a significant impact on the global supply and pricing of lithium, a critical material for the future economy
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