South Korean battery giant SK On has tapped American mineral oil company ExxonMobil for Arkansas lithium supply.
SK On to source lithium supply from ExxonMobil
As per the press release, SK On formally inked a non-binding agreement with ExxonMobil to acquire lithium from the latter’s first planned extraction project in Arkansas.
The memorandum of understanding (MOU) indicates a potential multiyear offtake deal for up to 100,000 metric tons of lithium. Further details, such as the contract period and the supply volume, will be addressed later.
In hindsight, ExxonMobil declared the drilling commencement in its first lithium well in southern Arkansas in November last year. The company secured rights to 120,000 gross acres of the Smackover Formation, which is one of the region’s most abundant lithium resources.
ExxonMobil’s Arkansas lithium to fuel SK On’s US battery production
According to the report, SK On aims to leverage the Arkansas lithium from ExxonMobil for its electric vehicle battery production in the United States.
This strategic move could enable the South Korean battery maker to maximize its eligibility for federal tax credits under the Inflation Reduction Act in the US.
SK On currently operates two battery production plants in Georgia. The company is also developing four new battery factories under the joint ventures it formed with major automakers.
The company supplies its American-made batteries to legacy automakers, including South Korea’s Hyundai, Germany’s Volkswagen, and America’s Ford.
“SK On has been working with global partners to secure key battery raw materials in a move to support our growing US manufacturing base and lead electrification in the region. Through this partnership with Exxon Mobil, we will continue strengthening battery supply chain in the US.”
Park Jong-jin, Executive Vice President of Strategic Procurement at SK On
ExxonMobil’s Arkansan project
ExxonMobil will extract the silvery-white alkali metal from underground saltwater deposits in the Arkansas site.
It will then process the extracted lithium into battery-grade material onsite. ExxonMobil claims that this approach will enable them to produce lithium more efficiently and reduce environmental impacts than conventional hard rock mining.
ExxonMobil aims to crank out enough lithium to support the production of approximately 1 million electric vehicle batteries per year by the end of the decade. It seeks to officially kick off initial production in Arkansas by 2027.
“The world needs more lithium to support its emissions goals, and we’re doing our part to drive solutions forward in the United States. This collaboration with SK On demonstrates the leading role we play in the growing market for domestically sourced lithium, advancing energy security and climate objectives, as well as supporting American manufacturing.”
Dan Ammann, President of ExxonMobil Low Carbon Solutions
SK On’s potential acquisition of lithium supply from ExxonMobil’s Arkansas project is undoubtedly a significant boost for the US electric vehicle industry, aiding the establishment of a solid domestic supply chain. It will play a crucial role in SK On’s efforts to have a reliable source of key battery minerals in the US, where the company is increasingly expanding its footprint.
