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Gulf oil giants Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are venturing into lithium production, aiming to extract the mineral from brine in their oilfields. This move aligns with their efforts to diversify and tap into the growing demand for electric vehicles (EVs), similar to Exxon Mobil (NYSE:XOM), which is pursuing lithium production in Arkansas.
Despite Saudi Aramco reporting a 25% decline in profit to $121.3 billion in 2023, down from $161.1 billion in 2022, it increased the dividend payout, providing crucial funding for the kingdom, which is diversifying away from hydrocarbons. It’s now venturing into sports, tourism, digital economies and green technologies.
Since becoming an EV hub is a part of those efforts, Saudis established a domestic brand, Ceer Motors, intending to produce 500,000 vehicles annually by 2030. Thus, producing critical metals, including lithium, becomes necessary. Despite an 80% drop in lithium prices since November 2022, the long-term prospects remain promising.
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Traditional lithium extraction methods involve mining the rock deposits and using sulfuric acid for extraction or pumping the brine to the surface and using a series of evaporation ponds to concentrate the lithium. While Gulf companies plan to extract from brine, it is unlikely they will pursue evaporation ponds as this method is devastating for the environment and requires a lot of water — making it problematic for an arid region like the Arabian Peninsula.
Per Reuters' report, Aramco and ADNOC were "in the very early stages of work to extract lithium" but declined to give details on the type of direct extraction technology (DLE) these companies could use.
Although in its infancy, DLE technology presents advantages over traditional methods. This approach uses filters, membranes, or ceramic beads to precipitate lithium from brine in a way that resembles an advanced water treatment facility. After undergoing the extraction process, the spent brine returns below ground through injection wells.
The challenges associated with extracting lithium from brine include low concentration levels, impacting economic viability. Aramco and ADNOC are reportedly exploring new filtration technologies to address this issue. Concurrently, Exxon Mobil and Occidental Petroleum (NYSE:OXY) are also exploring DLE technologies, aiming to capitalize on emerging methods as the world transitions away from fossil fuels.
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