ExxonMobil Says Construction Underway on New Lithium Well in Arkansas

ExxonMobil (XOM) on Monday said work has started on the construction of a lithium well in Arkansas, as the energy giant plans to become a leading producer of the critical metal used in batteries for electric vehicles (EV).

Southwest Arkansas, where the state's first lithium well is being built, is home to significant deposits of lithium, a crucial component used to make lithium-ion batteries for electric vehicles. Production is slated to begin in 2027, and could establish ExxonMobil as a key supplier for the EV market as well as a major corporate player in the clean energy transition.

"Lithium is essential to the energy transition, and ExxonMobil has a leading role to play in paving the way for electrification," Dan Ammann, president of ExxonMobil Low Carbon Solutions, said in a press release Monday.

Amman called the project a "win-win-win," in terms of "enhancing North American energy security, expanding supplies of a critical industrial material, and enabling the continued reduction of emissions."

Lithium's Importance for EVs, US Energy Security

According to the U.S. Geological Survey, 80% of the world's extracted lithium is used in batteries. As an element, lithium is very lightweight, and its ability to store energy makes it the preferred metal used in EV batteries.

Despite having lithium reserves estimated at 1 million metric tons, or roughly 4% of the world's total, the U.S. last year had only a single operating lithium mine, producing just 5,000 metric tons a year. Several states, including Maine, California, Oregon, and Tennessee, have known deposits of lithium but no plans as of yet to begin production or extraction.

With little domestic production of its own, the U.S. imports most of its lithium. Last year, the U.S. imported 3,400 metric tons of the metal, according to the U.S. Geological Survey, with the lion's share of imports in recent years coming from Argentina and Chile.

Most of the world's lithium production is concentrated in three countries: Australia, Chile, and China, which together produce over 90% of the world's lithium. Australia, the single biggest producer, as of last year accounted for just under half, or 47%, of global production.

The Institute for Energy Research has said that more lithium mines will need to be built in North America to reduce reliance on lithium imports, enhance energy security, and develop expertise that is in short supply in the U.S.

Meanwhile, higher lithium prices, which have risen fivefold since 2021, have made EVs more expensive for the average buyer. Among the culprits is a shortage of batteries and the raw materials used to make them, which could be mitigated with an increase in domestic production of lithium. Efforts to boost production in the U.S. could help bring prices down, making EVs more affordable for consumers and potentially accelerating the clean energy transition.