Exxon Mobil's Strategic Shift: Enters Second Lithium Venture in Bid to Boost US EV Supply Chain

Exxon Mobil Corp XOM has reportedly struck a deal with Tetra Technologies Inc TTI to exploit over 6,100 lithium-rich acres in Arkansas, representing Exxon's second venture this year into resources necessary for the production of electric vehicle battery metals.

The shift of Exxon into the lithium sector is in line with a broader trend of traditional energy companies and others focusing on new technologies that can enhance the worldwide availability of this extremely light metal.

Earlier this week, Tetra disclosed an agreement with Saltwerx to develop 6,138 acres of salty brine deposits in Arkansas that contain lithium and bromine.

Also Read: Exxon Goes Big on New Fracking Tech: Eyeing Double Oil Production from US Shale.

Exxon owns Saltwerx, a subsidiary acquired when Exxon purchased a 100,000-acre parcel in Arkansas from Galvanic Energy earlier this year.

Reuters noted that neither Exxon nor Tetra has disclosed the financial terms or provided a production or development timeline for the partnership. Some details are yet to be finalized.

Teaming up with Exxon allows Tetra to have a large partner with significant capital, assisting in bromine production from the acreage. Bromine is used in the production of flame retardants. At present, Tetra sources bromine from Lanxess for use in battery manufacturing. 

Currently, Tetra purchases bromine from Lanxess for battery production.

For Exxon, the partnership grants access to another source of lithium in the U.S. as the country rapidly scales up its EV supply chain. The companies intend to file an updated application with Arkansas officials to develop the brine deposits later this year.

Exxon would need to choose at least one Direct Lithium Extraction (DLE) technology to filter metal from the Arkansas brine. However, these technologies are yet to be proven at a commercial scale.

Tetra announced in November that it was exploring various DLE technologies, though it has not yet entered into any agreements.

Tetra had previously agreed to lease more than 27,000 acres in Arkansas to Standard Lithium Ltd SLI for lithium production. Standard Lithium has begun initial work on developing that project.

Price Action: XOM shares are up 0.33% at $105.75 premarket on the last check Thursday.