Exxon Mobil announced on Wednesday that it has signed a non-binding agreement with LG Chem to supply lithium from its proposed Arkansas project. The deal involves up to 100,000 metric tons of lithium over several years, though final terms, including price, are still to be negotiated.
Exxon is planning to extract lithium from the Smackover Formation, a brine deposit spanning from Florida to Arkansas and Texas, using direct lithium extraction (DLE) technology. This approach, similar to oil extraction, is being pursued by other oil companies, such as Occidental Petroleum and Equinor.
This agreement will help LG Chem use the lithium at its cathode facility in Tennessee, set to open next year. Patrick Howarth, head of Exxon’s lithium business, said, “This is about building a relationship with a company that has the same ambitions as us in building out the North American (battery) supply chain.”
Howarth also expressed confidence in the future demand for lithium, stating, “We know that the world’s going to need a lot more lithium than it’s producing today.”
The deal is contingent on Arkansas officials finalizing a lithium royalty rate, which has been under debate for years. Earlier this month, the state rejected a proposed rate of 1.82%. Landowners are pushing for a higher rate, as oil royalties typically range from 8% to 12%.
“It’s one of the key regulatory issues that we need to resolve to bring these projects to market,” Howarth said. He also mentioned that a 2.5% royalty rate could be acceptable, allowing Exxon to move forward.
Exxon has not yet revealed how much lithium it expects to produce annually from the Arkansas project, as the production volume will depend on the final choice of DLE technology. “We’re definitely narrowing down the selection,” Howarth said.
Exxon also signed a similar non-binding agreement with SK On in June. Despite market uncertainty, Howarth emphasized that Exxon has “seen really strong support from our potential customer base,” showing confidence in the long-term success of its lithium projects.
