'Oil Giant' ExxonMobil Also Mining Lithium... Riding the Electric Vehicle Boom

Purchase of Arkansas Lithium Mining Rights
"As a Hedge Against Declining Oil Demand Risk"

Global oil giant ExxonMobil is entering the production of lithium, a key material for electric vehicle batteries. This move is seen as a strategic effort to diversify its business portfolio in line with the accelerating shift from internal combustion engine vehicles to electric vehicles.

On the 21st (local time), the Wall Street Journal (WSJ), citing sources, reported that ExxonMobil purchased lithium mining rights in southern Arkansas from energy exploration company Galvanic Energy.

Lithium, known as "white oil," is a critical material used in manufacturing electric vehicle batteries. Lithium accounts for 40% of the cost of electric vehicle batteries. ExxonMobil, which sells fuel for internal combustion engine vehicles, is attracting attention by attempting to diversify its business through developing minerals needed for future vehicles such as electric cars.

The deal is valued at around $100 million (approximately 132 billion KRW), which is relatively small compared to ExxonMobil’s company size. However, sources say that if the profitability of lithium mining is proven in the future, the company plans to expand the business.

WSJ analyzed, "The purchase of lithium mining rights reflects the company's judgment that demand for internal combustion engine vehicles may peak," adding, "ExxonMobil is preparing for a future less dependent on gasoline by mining lithium."

ExxonMobil expects demand for internal combustion engine vehicles to peak in 2025. It also forecasts that eco-friendly vehicles such as electric and hybrid cars will account for more than 50% of new car sales by 2050. Specifically, ExxonMobil projects electric vehicle sales to increase significantly from 3 million units in 2017 to 420 million units by 2040.

The Biden administration in the U.S. is also encouraging domestic lithium production, having passed the Inflation Reduction Act (IRA) last year. Accordingly, it is analyzed that ExxonMobil, the oil giant, is actively preparing for the era of future vehicles by getting ready to mine lithium. ExxonMobil plans to start lithium mining within the next few months.

Pavel Molchanov, an analyst at Raymond James investment bank, said, "The outlook that electric vehicles will dominate transportation for decades provides a strong incentive for oil and gas companies to enter the lithium business," adding, "Ultimately, it will serve as a traditional hedge against declining oil demand."

This content was produced with the assistance of AI translation services.