As lithium producers warn of shortages amid a global push for electrification, oil and gas companies are making forays into extracting the in-demand metal—and banking on nascent technologies to “become big in lithium.”
Delays in mine permitting, staffing shortages, and inflation are making lithium producers anxious about their ability to meet skyrocketing demand for the battery metal, reports Reuters. “At stake is the pace with which electric vehicles could displace internal combustion engines, a key goal of the green energy transition.”
“You could end up in a crisis situation where the battery companies don’t have the security of (lithium) feedstock,” Stu Crow, board chair at lithium producer Lake Resources, said last week on the sidelines of a battery materials conference in Las Vegas. “There is a disconnect between the panic that we are seeing here and the frenetic activity of trying to secure supply within the industry.”
Several consultancies and companies are warning of looming lithium shortages. Albemarle, the world’s largest lithium producer, expects demand to exceed supply by 500,000 tonnes in 2030.
Even if new mines add to the lithium supply, a shortage is possible if there aren’t enough refineries to turn it into battery-grade materials. Carmakers would be left with a lower-quality product, which could undermine EV performance.
Prominent oil and gas companies like ExxonMobil, Schlumberger, Occidental Petroleum, and Equinor are all positioning themselves to help ease the strain. They are making efforts to diversify into lithium as the world makes the transition away from fossil fuels, reports the Financial Times.
“There are a number of oil and gas majors putting a lot of time and attention into how they can become big in lithium,” said Brian Menell, chief executive of TechMet, a mining investment fund.
But even as the rise of Australian and Chinese hard-rock resources drives recent growth in lithium supplies, oil majors have shown more interest in extraction from lithium brines, a key source of lithium in Latin America.
“It’s a natural evolution for oil companies,” Menell explained. “Lithium brines are an obvious one as unlike charging networks and wind farms, where [the fossil companies] have no skills besides project management, they are skilled at subsurface pumping and fluids.”
Big Oil’s lithium ventures could help assure automakers of a steadier supply, but their activity has been largely speculative to date, drawing but a tiny fraction of the capital they spend on fossil fuel production, the Times says.
Moreover, their success from investing in brine hinges on commercialization of direct lithium extraction (DLE), a technology that is as yet unproven at scale. It uses membranes, filters, or beads to extract lithium from brine—unlike the conventional method that uses evaporation ponds.
“Success for DLE, which has been used in Argentina by Livent since 1998 and in a handful of projects in Qinghai, China, would open the possibility of oil majors extracting lithium from wastewater at oilfields and at geothermal energy projects that have brine onsite,” the Times explains. DLE projects are under way in several parts of the United States. In Alberta, Imperial Oil has joined a DLE venture with E3 Lithium.
Investment bankers at Goldman Sachs say DLE is a “potentially game-changing technology” that would speed up the extraction process and increase recovery rates from between 40 and 60% to between 60 and 80%. The increased efficiency would allow lower-concentration resources to become financially viable, even justifying lithium extraction from wastewater at oilfields.
Ahmed Mehdi, who consults with oil and gas companies on their lithium strategies, said DLE’s contribution to lithium supply could grow from 10% at present to 15 to 20% by 2030.
As supply issues mount, there are still social and environmental barriers to lithium expansion, writes Mining Technology. Albemarle’s announcement last May that it would expand its lithium mine in Chile’s Atacama region was met with dismay by Indigenous and other local communities, after the use of vast volumes of water to extract lithium caused drought in the area.
Elena Rivera Cardoso, president of the Indigenous Colla community in northern Chile, said a river in the area has dried up because of lithium production.
“We used to have a river before that now doesn’t exist,” Cardoso said. “There isn’t a drop of water.”
“And not only here in Copiapó but in all of Chile, there are rivers and lakes that have disappeared, all because a company has a lot more right to water than we do as human beings or citizens of Chile.”