Black gold: How big oil is fuelling change in the global EV market | Fast Forward podcast season 2, episode 4 transcript

You can read the full transcript of our conversation between Fastmarkets’ own Andrea Hotter and Williams Adams, including an interview with ExxonMobil Low Carbon Solutions Senior VP, Dan Holton.

You can subscribe to Fast Forward wherever you get your podcasts.

Full episode transcript

Fast Forward, season 2, episode 4 transcript

Andrea Hotter [AH]: Welcome back to Fast Forward, a podcast by Fastmarkets. I’m Andrea Hotter, fast Market special correspondent, and this is episode four of our second series on critical minerals, energy security and the energy transition. William Adams, head of battery and base metal research at Fastmarkets is with me once again in the studio. 

Will, how are you doing? 

William Adams [WA]: Yeah. Hi Andrea. I’m very well, thank you. And yourself? 

AH: Yeah, not too bad. What have you been up to since we last spoke? 

WA: Been UK based, there’s a lot happening in the markets with all the tariffs and trying to work out where we’re going in the market. So yeah. Very interesting times as always. Heading off to Australia though next week for a couple of weeks, so that will be good, to see customers. 

AH: That’ll be very exciting. 

WA: Yeah, it will be. 

AH: Brilliant. Similarly, I’ve been pretty US based through May. I was in New York for some meetings with companies across the commodity spectrum, which as you can imagine, there’s a lot going on to keep them busy right now, as you just said. 

WA: Yeah, certainly. 

AH: But today we’re going to be talking about big oil and lithium. Now, I know lithium isn’t the first word that may spring to mind when you think about oil and gas companies. So, the goal today is to find out why they’re much more natural bedfellows than we might have previously expected. 

Big oil, I could not have gone any bigger. Our guest today comes from the world’s largest oil and gas company, not owned by a sovereign government. It’s US Major ExxonMobil. The guest is Dan Holton, who is the Senior Vice President for the company’s low carbon solutions business, and he wears several hats in this role, as we shall find out. 

So Will, let’s take a listen to what he has to say. 

WA: Great. 

AH: Dan Holton, it’s great to have you here. Thank you for joining the show today. 

Dan Holton [DH]: Well, thanks Andrea. It’s great to be with you. I really enjoyed our panel at the Safe Summit and look forward to a great conversation today. 

AH: Yeah, me too. So just following on from that, I must admit when I first heard that ExxonMobil was gonna be at the Fast Markets Lithium conference a couple of years ago, I sort of scratched my head a little bit because ExxonMobil and its various iterations has been a petroleum company for over 140 years. I think about oil and gas. There’s a rich history in that. So it was a little bit surprising to me to hear that the company was making a move into lithium. So two questions for you. 

First of all, why lithium? And secondly, ExxonMobil had earnings of almost $34 billion last year. I mean, isn’t lithium a little bit small for a major oil company like ExxonMobil? 

DH: Well, the answer to your first question, Andrea, is it’s very close to home for us. When we think of the lithium business and what we’re trying to do here, we’re doing direct lithium extraction from deep brines. 

It is very close to home. With what we do in our traditional businesses. You mentioned the oil and gas part of our business. Long history in geology and subsurface in drilling and production. All of that applies directly to producing brines that are rich in lithium. Then you look at other parts of our business, the downstream refining and chemical part of our business, where we have chemical processing and manufacturing. 

That’s very similar to what we’re applying to the lithium business with direct lithium extraction. And then you think of the automotive supply chain into EVs. We have a long history there as well with our fuels and lubricants business. So, when we looked at the specifics of getting into the lithium business, it felt very close to home. 

The other way we think about this, Andrea, is you mentioned we have a long history over 140 years, and we have always evolved our business with the needs of society. Think about the first products that Standard Oil was making in the late 1800s. It was not gasoline for automobiles that people might think of. 

It was actually kerosene going into the lighting market. And so if you think of how that has evolved over 140 years, automobiles, gasoline, diesel, marine, and jet fuel, chemical production. Our business has evolved and will continue to evolve, and we think of ourselves not as a petroleum company and in many ways broader than an energy company. 

We really think of ourselves as a technology company first and foremost, and applying the technology. And the capabilities that we built over many decades to the products that the world needs. And lithium is one of those products. And when we looked at that, we said, that’s a sweet spot for us, putting all of these components together, and we have something to offer there. 

And the second question is, well, is it material? And the answer is yes. And we see lithium as a growing market. That’s the thesis for our business is lithium may be a relatively small market today compared to what it can become. And when we look at the demand for lithium and the growth expected to double by 2030, triple by 2035, pick your estimate of demand growth. 

We think the direction of travel is clear. It’s gonna be a material market and we can make a big difference applying the technology and the capabilities in this new way of producing lithium. 

AH: And I suppose the other part of this is, why now? Should I take this as a sign? Maybe the ExxonMobil sees, I don’t know, the use of fossil fuels declining more rapidly than expected, or is it something else? 

DH: Not at all. We see what we call the “and equation” as our mission and our strategy and the way we think of this is, when you look at what the world needs, population is gonna grow by another 2 billion people by 2050. The criticality of energy to improve health, wellbeing, lifting people out of poverty, the world is gonna need a lot more energy. 

Oil and gas are gonna be a critical part of that. Any outlook for the future requires significant amounts of oil and gas. We’re gonna be there to produce that oil and gas. At the same time, we need to do that and reduce emissions, mitigate the risk of climate change. We view that as the “and equation” that sets the strategy for our company. 

And so, when we look at that, how do we contribute? Well, we’re gonna contribute by continuing to produce oil and gas with much lower emissions over time. We’re gonna contribute with new businesses in low carbon solutions, and lithium is one of those new businesses. So, we see it a perfect part of this portfolio moving forward. 

It is an “and equation”. It is not an OR equation. 

AH: I like that and equation. I hadn’t heard that before. I think I’m gonna start using that. I might steal it. 

DH: You are welcome to. 

AH: Dan, you wear a few hats at ExxonMobil. So much so that when I did a quick Yahoo Internet search for Dan Holton Exxon, the people who ask section actually says, how many jobs does Dan Holton have? 

And I’m not joking there. So I’m curious with all of those hats on, where does lithium fall within the ExxonMobil business? Maybe you’ll explain why the internet says that. 

DH: I can’t answer that question and why the internet says that, but I can explain the hats that I wear and how they fit in. If you look at ExxonMobil and in the context of this “and equation”, we have three businesses, and the first one is probably the most familiar to people. It’s the upstream oil and gas business. 

The second business is what we call our product solutions business, and that’s our fuels, our lubricants and chemicals. The third business, and this is where lithium fits in, is low carbon solutions, and this is where we have new businesses that we’re creating to help with emissions reduction. As part of our investment plans, we have planned for $30 billion in capital investment through 2030 in emissions reduction, about a third of that in our own facilities and two thirds of that to reduce emissions for customers. 

Low carbon solutions is a big part of that. And we have three business lines within low-carbon, carbon capture and storage, low-carbon hydrogen and lithium. And in my role as a Senior Vice President of Low Carbon Solutions, I have responsibility for both the hydrogen and the lithium businesses. That’s how it all fits together. 

AH: So, this is a core part of the future business rather than a diversification for a while strategy. I’m taking it from everything that you are saying. 

DH: This is absolutely core. It is in our investment plans for the future. It’s part of our strategy and it’s something we think as part and parcel of what ExxonMobil is all about. 

AHL: All right. Well, lots of growth to come. Also, many people might not realize, but this isn’t ExxonMobil’s first move into lithium, not the first rodeo. The work of Stanley Whittingham, who was the man who pioneered rechargeable lithium-ion batteries in 1976 was actually done in an ExxonMobil lab. 

So tell me a little bit more about that and how that came about. 

DH: I think it’s a good reminder that we are playing a long game in these industries, and technologies take a long time to develop and mature. Dr. Whittingham, who pioneered lithium-ion batteries, he then won the Nobel Prize very recently in chemistry for his work back then. And if you think of that pioneering work back in the seventies. What that’s provided for us today. We are not entering the lithium-ion battery market, but we are being a critical mineral and material supplier to that market that he helped create back in the seventies. 

And that goes for both the lithium side of the battery cathode side and as well as synthetic graphite, which is another one of our new business lines on the anode side, and so what started long ago, we’re reaping the benefits and I think that just is a reminder of a long-term investment in technology will pay dividends, and that’s a very big focus for us. 

AH: Okay, Dan, so we’ve talked a little bit about the whys and wheres, let’s turn our attention to now. 

What exactly has ExxonMobil done? What have you been up to over the past 18 to 24 months since I first heard that you were coming to the lithium conference? 

DH: Well, Andrea, we’ve been very busy. We made a lot of progress. We have appraised the resource that we have in Arkansas in the Smackover formation. 

Very pleased with the results of our appraisal program there. We have produced battery-grade lithium carbonate in our pilot. A facility that we have here in the south part of Houston, and we’ve done that running brines from the Smackover.  

We’ve had really great progress with the Arkansas Oil and Gas Commission and had a big milestone that we passed on what’s called unitization of our first acreage for the first project in Arkansas. 

Now we’re moving on to a discussion on the royalty setup that they’ll have in Arkansas. On the customer front, we’ve made a lot of progress there. We publicly announced two MOUs with customers SK On and LG for US domestically produced lithium supplied through their battery supply chains in the US. In all fronts, from the resource to the customer, to the technology and the regulatory front, great progress in the last 18 months and we’re very excited about taking the next steps. 

AH: Yeah, definitely been busy. So, let’s get into that resource a little bit. Salt water brines, you mentioned, now what is different in lithium versus oil? I’m wondering what’s easier, what’s harder? What carries over from oil to lithium? Maybe what doesn’t as well. 

DH: The great thing is so much carries over, and I think that’s one of the key learnings for us. It’s what we had anticipated. That’s why we thought this was a good fit for us. And as we’ve gotten into the appraisal program, drilling of exploration and appraisal wells, and gotten into the technology. It is very similar. So just to share a very practical example, you would see a rig being used to drill a lithium appraisal well, it would then move on to do something in oil and gas, and then it would move on to do something in carbon capture and storage. It just paints a picture for you of how we can take the technologies and the learnings that we’ve had in oil and gas and read those across very well. 

There are some differences. If you look at the density of oil, which is less dense than water, and so there’s a buoyancy effect when you’re producing oil that you don’t have when you’re producing brines. But for the most part, you have a pretty good read across, and we’ve been very happy as we’ve unpacked that. 

AH: I love that. It sounds like oil and gas when you talk about drilling a lithium well. I’m curious how costs compare between the processes as well. 

DH: The costs are gonna be a function of the depth that you’re drilling, the quality of the reservoir is a number of the same factors that you have. When drilling for oil and gas, you have those same factors in lithium, and that’s how things stack up 

AH: I imagine, as well, coming into a market that’s fairly well established, you’ve got a lot of traditional mining companies active. How does an oil and gas major differentiate itself in the lithium market? How are you gonna do that?  

DH: Well, I think the first thing we’re doing to differentiate ourselves is we’re doing something that’s different. We’re bringing new technology. What we’re doing is fundamentally different in terms of drilling into deep brines and direct lithium extraction. The environmental attributes of the technology is differentiated when you look at the carbon intensity of the process, the land use required, much lower environmental footprint than existing methods. 

Today, when you look at the supply chain for lithium, the refining capacity is not exclusively, but the overwhelming majority is in China. And so hard rock mining is gonna go through China with that refining step, for the most part. What we’re doing with direct lithium extraction is we’re going all the way to the finished product, all at the site. 

You do not need a separate refining step. You’re not dependent on that step in the supply chain. Another area where we differentiate ourselves is we’re starting a lithium business, but it’s in the context of ExxonMobil, and so every step of this process brings not just our lithium team, but the full weight of ExxonMobil behind it. 

So just as an example, when we’re doing our smack, we’re bringing all of the upstream capability to bear there. When we build out our facility, it’s our global projects company that’s bringing decades of expertise in large capital projects. When we build out our supply chain, our first project that we envision in the Smackover is about 20 KTA. And so when you look at that, we’ll be supplying 20 KTA of a product, but through a supply chain that supplies millions of tons of similar products to similar customers around the world.  

Final point, I would say, differentiator is with the credibility with customers. And if you think, certainly in today’s market environment, where you know the idea of partnering with a supplier in a market with tremendous price volatility, I think ExxonMobil brings a lot of credibility to customers. So those are a couple of the ways that we’ll differentiate ourselves, Andrea, and maybe one more I’ll add is to the battery materials market I mentioned we’re not just a lithium supplier, but we intend to be a synthetic graphite supplier as well as we look in our product solutions business to build new businesses around carbon materials. 

AH: Very interesting. We’ll get into all of those aspects in a second. I’m just curious, ’cause you mentioned that the US has a regulatory backdrop that’s been very supportive of developments like this. And you also mentioned that ExxonMobil’s global in oil, lithium, obviously you’re focusing on North America. 

Is it that regulatory backdrop that pushed you to start in the US or is it something else? 

DH: It was the resource that had a start in the us. We intend to build a global lithium business that will compete globally. We are starting in the Smackover because that was where we saw the most attractive resource and the best place for us to start the business. 

At the same time, there is a clear driver for the United States to build out these critical mineral supply chain. So, I think the confluence of those two things works very well for us to start our business in the Smackover and be part of the solution to building out that critical minerals supply chain. 

AH: Now you are coming at this at a very countercyclical time for an investment in lithium. It’s been in a bear market for quite some time. I’m curious how long you expect that to continue. What’s your view of the market in terms of its outlook? 

DH: I would say investing counter-cyclically is something we do. As a part of our business, looking at the long term, being comfortable with commodity price cycles and taking the long view and investing in the down cycle is something we do in our upstream and product solutions. So doing that in low carbon, is no different from that. I certainly won’t predict the price and where I think it will get to and when I think it will get to. What I will say is we take the long view and our investment will be based on our view of the long-term supply-demand fundamentals and the ability to have a competitive business built on those fundamentals. Not what the price is today or what we think the price will be in 2026, for example. 

AH: All right, so the cycles don’t matter too much to you guys. Let’s talk a little bit about the technology. It’s very competitive in terms of technology. You just mentioned earlier, direct lithium extraction. For our listeners who might not be familiar with the lithium mining process, I thought you might be able to explain what direct lithium extraction, which is often shortened to DLE, actually means and why it’s so important to lithium. 

DH: I’d be happy to. To me, it starts with the raw material, which is the brine, and so the process is you’re now taking a lithium-rich brine and you’re running it through a few steps of essentially a chemical and water processing unit. There are different ways of doing this, but you’re trying to selectively take out the lithium ions from that brine. 

And so, one common way of doing this is called selective absorption. And so, the easiest way to think about this is you have a sorbent, you have a material, and then as the brine passes over that material, it’s selectively absorbing. It’s taking the lithium and absorbing it into the sorbent, and then you’re going to use fresh water and some other materials to then desorb and then take the ions off of the sorbent, and then you have a stream that is much higher concentration in lithium. 

And then once you have that stream, you’re then going to concentrate it up, you’re going to refine it, you’re gonna strip out some impurities, and ultimately you’re gonna end up with a finished product that could be lithium carbonate or lithium hydroxide, and then you’re going to take the spent brine and reinject it back into the same place that you got it. 

And it maintains the aquifer, it maintains the pressure and the reservoir, and it’s an environmentally sound way of managing that circular process. The re-injection has been done for decades, by the way, in the Smackover, as people have extracted bromine from a similar process. 

But that’s DLE in a nutshell, Andrea, is those steps to get you from the ions in the brine all the way to a finished product of lithium carbonate. 

AH: It was certainly the right move asking an engineer to explain that because if I tried it, it certainly wouldn’t have turned out quite like that. So thank you for that explanation. I’m curious where you are with that technology now in terms of ExxonMobil and its own work. Are you partnering with providers? Are you doing your own thing? Where do things stand in that space? 

DH: We’re evaluating a number of different technologies, including for building our pilot unit that I mentioned in Houston, and as we develop our first project, the process that I described is pretty complex in terms of the different steps, and so there are many technology providers at each step. 

We’re looking at a number of them and building our own capability as we work with partners. 

AH: Okay, great. And we’ve been talking so far about lithium brines. Are we gonna see ExxonMobil move from brines into hard rock mining? 

DH: Our approach is to stay close to our core and where we think we have something unique to add. 

And we are not in the mining business. We haven’t been in the mining business. Our technology capabilities don’t necessarily read across in the same way that the brines do. So, we’re gonna start our business in the deep brine, direct lithium extraction, and we’ll go from there. 

AH: Okay. Well then maybe let’s take that a little bit further. I’m curious how far down the supply chain you might go, if not now, maybe eventually, given the chemicals interest that ExxonMobil has, do you see this mind lithium production feeding into your own future processing, refining other ventures, or are you planning to stick with the upstream and be a supplier to the market for that product? 

DH: Right now, our plans are to stick with the upstream and be a supplier to the battery materials market, and that goes for both the lithium supply on the cathode side as well as synthetic graphite to the anode. And we found that model fits us very well. If you look at our chemical business, for example, we typically go one or maybe two steps down the value chain. 

Where we bring competitive advantage capabilities is typically in the upstream side of the business. There are some exceptions. There are some businesses finished lubricants, for example, where we get pretty far downstream, but for the most part, this is our sweet spot. 

That’s where we plan certainly to start, and we’ll see as we build our business out. 

AH: All right, so. Talking of those supply chains, you’ve obviously got relationships throughout the various supply chains that you are active in, whether it’s chemicals, whether it’s with the automotive manufacturers, whether it’s on the technology side, it goes on and on and on. 

Does that give you a bit of an advantage when you come at the customer base for your lithium production, the fact that you’ve got an in with those companies already? I know there are different sets of people you’d be dealing with within those groups, but does that help at all? 

DH: It absolutely helps. Number one, we have long relationships with most of these companies. 

We have credibility established over many years, so it absolutely helps with that. That said, we need to be a competitive supplier for lithium and needs to stand on its own as a competitive offer, but having the door open. The relationships established, the credibility established, knowing qualification needs, all that is a really significant benefit for us and it’s helped us get a very fast start with customers. 

AH: Yeah. I’m mentioning those customers. You talked about SK On and LG Chem. Are you in discussions with other battery makers and car companies? 

DH: Yes, and we’ve announced publicly those two, and as you can imagine, we are in discussions with many more. 

AH: You are not gonna break any news for me here, are you Dan? 

DH: No, no news today. But, uh, we we’re building a business and we have, as you can imagine, many of those type of arrangements that we’re working. 

AH: And what about energy storage? I’m curious whether you are also targeting batteries for energy storage in the lithium space. 

DH: Absolutely. We see that as a really important part of this lithium demand growth story. Even within our low carbon solutions business, we’re doing a lot of work in the energy storage space, providing low carbon power for energy storage and batteries and low carbon data centers. So that’s right in our wheelhouse, and we see that as a very big part of the demand picture for lithium as well. 

AH: Yeah, energy storage is definitely a flavor of the month at the moment and market that’s gonna just continue to grow. 

DH: Yeah 

AH: And I wanna go back to getting a little bit technical again for a minute. You mentioned earlier lithium carbonate was the choice for your production. That’s typically used in lithium ion phosphate batteries. 

I know previously were thinking about lithium hydroxide, which is used in those higher nickel content batteries. So, I’m curious about why that decision? It helps to potentially determine which direction battery chemistries in the US are starting to move or are already moving. In your eyes, is that why you picked the carbonate side? 

DH: Yeah. We haven’t made a decision on carbonate versus hydroxide. 

AH: Okay.  

DH: I was using that as an example, and a common supply chain coming out of Brines and DLE. That certainly is an option for us. Hydroxide is also an option, and so that will depend on, to your point, battery chemistries and how they evolve and how cathode and battery capacity gets built out in the US and other markets. 

I would say carbonate can go into not only the LFP as you described, but also some of the mid-nickel chemistries. There’s demand for lithium carbonate as well. So, we see the spectrum of opportunities and we will evaluate that as we develop our first project. 

AH: Okay. All right. Now I’d like to turn and look more broadly at big oil and the industry in general. 

We have heard a lot over the past years about the energy transition. We are hearing a little bit more about energy security, but from where you sit, what does that really mean for a company like ExxonMobil? The energy transition. 

DH: I go back to the end equation that I described earlier. We see this as a need to meet the world’s demand for oil and gas, and we need to supply products that lower emissions, and we’re gonna do both. 

I really like the way Dan Juergen puts this is it’s an energy addition. And so as the world’s population grows, demand for energy grows, we need to do both. And so, oil and gas is part of it. Our new low carbon businesses is part of it. It’s an “and equation”. That’s exactly how we think about the energy transition. 

AH: Now, we have seen, however, some oil and gas companies rolling back from their commitments to low carbon strategies, and I’m talking very openly scaling back either climate goals or rebranding their low carbon plans to focus on. Technologies that are probably more closely related to traditional oil and gas operations, rather than going big into wind or solar or other renewables. 

Why do you think that is? What’s changed for an industry? Is it the whole drill baby drill being back on the agenda in the us? Is that part of it? 

DH: I won’t speak to competitor strategies, but I will speak to ours and we decided that the way we are gonna contribute to this energy transition energy edition is by staying close to our core and looking at what we do really well in our existing businesses and in the low carbon businesses, staying very close to those fundamentals. So, we have chosen very deliberately not to get into wind or solar because we don’t feel like we bring anything new, any advantage to those industries. 

We picked in low-carbon, carbon capture and storage, hydrogen and lithium, because they’re so close to our core. And so we haven’t changed any of our plans or approach, but we set them because they make sense both for achieving our objectives for reducing emissions, but also our objectives for strong returns and profitable businesses. And that’s how we have approached it. 

AH: And Dan, what’s the investor reaction to this move into lithium beam? On the one hand, you’ve got these activist investors who are really supportive of environmental policy advocating a move away from fossil fuels, but they also want a short-term return on investment. 

So where is that situation right now? 

DH: I think the investment community is gonna wanna see both our progress in these low carbon investments, but also a good return on those investments. And that gets back to our approach, which is these need to be close to our core. They need to deliver solid earnings and cash flow growth and competitive returns in the ExxonMobil portfolio. 

And that’s the ambition we have for all of our businesses in low carbon, including lithium. And I think the reaction has been our choice of those different businesses because they’re close to our core. They make a lot of sense.  

AH: Yeah. Lithium also is cleaner than oil, but it’s not completely impact-free. As we know, mining does have some repercussions on the environment. So how do you ensure this doesn’t become just another resource extraction story for the company? 

DH: I think all sources of energy have trade-offs. And to your point, lithium is no different. And so, we take that very seriously and when we look at the choice of technology, the way we’re bringing lithium to market, the fact that it has lower carbon intensity, the fact that it has lower land use requirements, the fact that we have a long history in the Smackover of managing the production of brines and the reinjection of brines and managing the environmental impacts, all those are front and center. As we develop this project, we’re confident we can do this and have a lower environmental footprint than other sources of lithium and on balance. That’s gonna be very good for the business and good for the environment. 

AH: Now, Dan, I can’t let you go without talking about geopolitics. It is incredibly important right now. I am very curious how the company is navigating geopolitical risks associated with lithium. 

DH: Yeah, it is a complicated area and I would say our company is managing many geopolitical risks beyond lithium, as you can imagine. 

And this goes back to being around for 140 years, you’ve been through a number of geopolitical risks and cycles, and so this is not new. The characteristics are always somewhat different, but the approach we take to manage these risks is pretty consistent. For lithium, we’re looking at this again through the lens of the long game and that we are about building out a global business at scale that’s gonna generate significant earnings and return over the long term. 

And so the current geopolitical wins are gonna come and go. Just like we manage the pricing volatility and don’t get caught up in what the price is today or the price is tomorrow, but what we think the fundamentals are in the long term. That’s how we think about the geopolitical, uh, risks as well. 

AH: There’s been a raft of policy. I know we could sit here and discuss that all day. It would take entirely another podcast, but I’d love a really quick reaction from you and your view on tariffs, Section 2, 3 2 on Critical minerals, other executive orders. How do you see all of that playing into this desire to reshore supply chains and decouple? 

DH: When I look at those things, I go straight to, well, what is the intent and the intent of building out critical minerals and battery supply chains in the US? It is a clear and important ambition for the US government, and so that makes a lot of sense to me. We support that. We think we can be a big part of that solution in helping to build that out. 

I think one of the most important considerations is it’s not enough just to have the production of critical minerals. You need to look at the entire supply chain. And so if you just take lithium as an example, we also need cathode capacity, for example, to be built out in the US. Unless you have each step built out, you’re not gonna be in the position to achieve the supply security goals that you’ve set in the first place. I think that’s probably the most important policy consideration that we need to work through. 

AH: And it’s interesting you mentioned that because I did want to touch on the relationship with China. Obviously, a huge producer and a big supplier to a lot of Western companies. So many companies are working either in partnerships or have customer relationships with China. So my question is, can the West do it alone without China? Should it be looking to completely de-risk supply chains or maybe just decouple them a little bit? 

DH: I think what China has done over the last 10, 20 years and built up this dominance in these critical minerals, battery supply chains, they have technology, they have capability, and being able to take those learnings and apply them to build this out in the US, that makes a lot of sense. That said, we need to be able to control our own destiny to some extent. And so having a suite of options, including being able to build this out on our own, I think is gonna be important as well. 

And that’s why the approach we’ve taken is looking at a number of different technologies, so we’re not too baked into one. 

AH: And I happen to know you’re a tennis player, Dan, so I’m curious how you’d express the West in terms of a lithium match, where the West is in this lithium match. Is it Advantage China? Is it break point, love 40? Can we get to that game session match moment? Can we get there? 

DH: I’m an optimist, uh, Andrea, so I’m gonna say we’ve got a new set that we’re starting with a clear ambition and a lot of confidence that we can get this. It’s gonna be very hard. So this is certainly a five setter. 

34:55 AH: And on the regulatory front, I’m curious about the hurdles you might have encountered so far on the way. It’s obviously not a straight path to getting this industry up and running. 

DH: I think with what we’re doing in lithium, the time we have spent in Arkansas and the engagement has been really valuable. We’ve learned a lot. Tons of engagement with the A OGC, with the local community, with landowners, and I think that’s gonna pay dividends to get to a good regulatory framework that’s gonna allow us to be competitive. And that’s really a key step for us. At the end of the day, we’re gonna be competing in a very competitive market. 

A competitive royalty, for example, is just gonna be critical to get this industry off the ground. So that’s really the next step in our regulatory process is that royalty in Arkansas. And I’m confident that we will come to a solution that can give the industry a competitive approach and also give the right benefits to landholders and other stakeholders. 

AH: And what about the permitting timeframe? That’s one of the biggest complaints I hear constantly, whether it’s in lithium, whether it’s in copper, whichever the industry. We have seen some movement with ten projects selected for fast tracking recently. Three of those were in lithium. So where do you see things in terms of permitting? 

DH: I see that as one of the strongest advantages we have of the direct lithium extraction technology. We do not have the level of permitting requirements and lead time that it would take, for example, to bring on a new hard rock mine. So the fact that we’re doing this in a jurisdiction in the Smackover that has a long history of brine extraction for bromine, that there’s a good framework set in place from the bromine industry as well as the heritage oil and gas industry. 

We do not see that as an impediment. We see that as actually a great advantage that we have, that we could go relatively fast with the right royalty regime and others in order to bring new lithium supplies to the US. We can do that faster and we can do that with a lower environmental footprint than hard rock mining. I think that’s a big advantage for us. 

AH: And there’s also been a lot of buzz around battery metals and particularly lithium as the new oil. I’m curious as to whether you agree, do you see lithium becoming as geopolitically important as oil is? 

DH: Well, back to this “and equation”, I think we need both. We see lithium growing. We see the demand for oil is gonna continue to be there. We’re gonna be there to supply both. 

AH: Well, I’m glad you mentioned that future aspect in terms of supplying both, where do you see your operations in, let’s just say five years in terms of scale and production? 

DH: Well, what we’ve said is by the early 2030s, we want to have enough lithium that we’re supplying to meet the demand for a million EVs. 

AH: Mm-hmm. 

DH: And so we intend to scale this pretty rapidly. There’s a lot of uncertainty that needs to be de-risked in the coming years, but our ambition is bake. Our ambition is global, and our ambition is material for ExxonMobil. 

AH: Do you think you might get involved in M and A? We know that the oil majors definitely have quite deep pockets. 

Are you gonna be so big that you’ll just come along and eat everybody else’s lunch effectively? Big oil, big lithium? 

DH: We haven’t thought about it that way. We think about this as how do we take what we do well and apply that to this new technology and new business to create an advantage. And so M and A is a tool that’s helpful in some contexts. 

In this context, we’re starting something new, applying our own advantages. That’s how we think about entering this business. 

AH: I know we focused on lithium, but you did mention synthetic graphite. You know, I wanna give you another job for the Yahoo Search Dam. So tell me a little bit about your plans in that area, if you don’t mind. 

DH: It’s also an exciting area for us in that we are taking existing products in our refineries and we’re able to upgrade those products. And ultimately sell those into this synthetic graphite market with a differentiated product that we’ll be able to give improved battery performance. And so it uses again what we do really well, which is refining chemical processing and finding a new market for those products and capabilities. 

And it’s a nice compliment with our lithium business as we can be an integrated supplier, both the cathode and the anode side of the battery. 

AH: Yeah, very interesting. Another one to watch this space. What’s the next thing we should be watching for in terms of lithium and Exxon MoMA? 

DH: I would say the royalty in Arkansas, is the next big thing that we would expect. Stay tuned for that, Andrea. 

AH: Okay. And just one very final question for you. If I was walking out of this interview and I had to explain to somebody ExxonMobil’s lithium activity in just one sentence or so, because that person only knows the company for oil, how should I do that and what should I say? 

DH: We’re drilling 10,000 feet down. We’re taking lithium ions out of the brine and we’re able to do that in a way that has lower environmental footprint and is fundamentally advantaged versus other sources of lithium today. And we can do that because we have a long history in each of the technologies that are needed to do that. That’s what we’re trying to do. 

AH: That was a very good summary indeed. Thank you very much, Dan. This has been such a pleasure. I really appreciate everything you’ve been telling us and thank you so much for coming on Fast forward. 

DH: Andrea. I really enjoyed it. Thanks for the discussion. 

AH: Likewise, and I look forward to watching developments in Arkansas. 

So it was fascinating to speak with Dan and hear the parallels with, but differences from also oil and lithium if we didn’t already know it. Big oil’s involvement signals that lithium is no longer a niche play, firmly up there as part of the strategic energy transition. 

Well, from a market’s perspective, obviously there’s a lot of potential upside from the entry of big oil companies like ExxonMobil into lithium. One of them being that they bring an influx of capital. We know they have deep pockets and are willing to fund large scale projects.  

What kind of an impact do you think that could have? 

WA: I think it’s gonna be really important going forward. if we look at our long-term forecast, then, after we get into the 2030s, we are seeing big deficits generally coming along the line and the only way we’re going to avoid those is if we have investment. 

Now, one of the problems in the current climate is we’ve got low prices and typically what we then see is some of the junior miners and even some of the bigger miners start to put their breaks on, their investment breaks on when prices are low. And that will actually only just compound the deficits going forward. 

By having big oil in or big mining companies full stop. We’ve also got Rio Tinto coming in, will mean these projects can continue to be invested in through the various price cycles. 

And that will mean we have much better opportunity of not having those deficits further down the line. And I think it also means when you’ve got some big players in, Western players in, it will help rebalance the market. At the moment a lot of the processing is done in China. But I think, Exxon will be and using DLE technology, they’ll actually be getting all the way through to be producing refined products in the US.  

AH: You mentioned technology there. I think that’s also a really interesting aspect. We’ve seen DLE direct lithium extraction technology being developed over many years now. I wonder whether this could just accelerate the development of those technologies because it sounds like it is. 

WA: Yeah, I think so. And it’s really interesting that Exxon describes itself as a tech company. 

And if you think about it, it is high tech trying to find out where the oil is or the brines are underground, you know, it takes a lot of technology. So what they’re actually doing is repurposing that technology to be used to find lithium. 

DLE opens up lithium production to many different parts of the world, which probably wouldn’t be able to extract their lithium if they use more sort of conventional means. 

AH: Yeah, and I know Dan said the company’s focusing on the upstream side. 

I do wonder if over time we’ll see oil majors partner with battery companies with scale to jointly develop more integrated supply chain so that they’re combining that oil infrastructure expertise with the battery technology expertise, because that could really lead to co-investment potentially in gigafactories integrated sourcing models, even co-owned resource assets, a sort of an era of new strategic alliances. Do you think that’s something that could be on the cards, Will, if we see more of this continue? 

WA: Yeah, I definitely think so. And more to the point I think it’s needed. 

I think one of the reasons why the Chinese have been so successful is how vertically integrated they are. So you look at something like BYD or CATL, they are integrated all the way along the supply chain. And as a result of that, I think that’s why they’re successful. That’s why they can continue to be very competitive. And I think that’s what we need in the West. 

We certainly, need that in Europe. You can see what’s happened in Europe. We haven’t had that sort of integration. And we’ve had various companies as a result, having to, just not survive. And that’s all slowed down the process. It’s making it even harder for more local supply chain. So yeah, I think in the US that would be useful. Or wherever in the West, I think we need more partnerships. 

AH: I’m really interested to see the role that companies like Exxon play in market consolidation. 

Oil companies, they’re giants. They could come in outbid or totally crowd out smaller lithium miners or start ups if that was the route they decided to go. Do you think we could go down that route? Dan wasn’t saying that was the Exxon role, but who knows?  

WA: Again, I think we are going to need a lot of lithium. 

It’s a market growing. It’s in a hurry. As I said, we are in oversupply, but we’re already just waiting for demand to catch up. And the interesting thing is we are in a low-price environment because we’ve suddenly seen a sudden surge in supply, but demand is still growing really fast. 

So it’s not a problem on the demand side. It’s just that the market is still relatively small and therefore, if a new mine or two new mines come on at the same time, it has a big splash on the supply side. But as the market gets bigger, we are gonna need more and more of those big mines coming on at the same time. So yeah, I think, having some size in the market is gonna be needed and I think it will help to make us a smoother future. 

AH: Well, you mentioned earlier that the markets and oversupply, how do we get there? Why did that happen? It’s a case of new supply coming on at the same time. I think you need to really go back to 2017, 2018. Again, we had a lot of Australian mines coming on in 2018, and that led to an oversupply. 

Then we had the low prices in 2019 and 2020. But then after that we saw demand was still growing strongly and despite that extra supply coming on the demand soon caught up with that and absorbed that extra supply. And then we saw those runaway prices we did in 2022 and 2023, those high prices then attracted more material onto the market, more supply. 

We also saw a lot of the incumbent producers, a lot of the new production was well telegraphed. We saw it coming over the horizon. But almost leapfrogging that was a sudden rush of new Chinese supply. And they brought on their lepidolite production in China, but they also brought on very rapidly some of the lithium mines in central Africa. 

So again, we saw another surge in supply. And once again, we’re waiting for demand to catch up with that supply. And I think we are gonna continue having these leapfrogs, but that’s what you see in most markets where you have a sort of boom bust. 

AH: Absolutely. And we mentioned earlier the advantages of scale. I mean, oil and gas companies, they’ve got huge experience with infrastructure projects, with logistics, with global supply chains. That’s a huge advantage here as well, isn’t it? 

WA: Yeah, I think it is. Obviously they’ve got the money to invest in these projects, but I think if you’ve gotta look at their technology, you wouldn’t initially thought of an oil company coming into a metal producing world. 

But actually, because it’s in brine, because it’s underground, they have a lot of synergies. And, can use the same rigs for whether you are drilling oil or whether you are drilling for carbon. Capture or whether you are drilling for brines. 

So there’s a lot of synergies in that. And as again, they’ve got the technology. they’ve got the know-how, they’ve got the engineers, and they’ve got the big teams. But in addition to actually finding it and extracting it, they’ve also got the experience in refining oil so they can go on to refine lithium as well. 

And they’ve also got the infrastructure to build these projects in. I mean a company like Exxon is massive. It does a lot of its own project development, so they’ll be able to have big advantage in that side as well as also transporting these things around the world. 

AH: Will you immerse yourself daily in the lithium world? So do you wanna talk a little bit about what that looks like in terms of research and pricing? 

WA: Well, it’s really interesting when we look at something like, big oil getting involved. One of the things we haven’t really mentioned is, yes you can have the technology, and you can find new errors and new ways to get lithium. At the end of the day, it’s gotta be whether it is cost effective. 

There’s also the other side of it, I suppose, which, you know, you want local supply chains as well, and therefore there might be able to pay a bit of a premium for that. But I think the cost of these different methods is very important. That’s why we have our cost analysis service where we look at the individual costs of each project to work out where it is on the cost curve. That then helps give us more insight into what is likely to come online and when. 

AH: That’s great, Will, thank you. And a quick reminder to our listeners, they can catch up on the previous podcast and discover more about those products Will just mentioned on Fast markets.com/podcast.  

So we’ve obviously got our big lithium and battery raw materials conference in Las Vegas coming up on June the 23rd to the 26th, which is gonna be another great event I would expect, Will? 

WA: I certainly think so. And let’s see how many oil companies are there. 

AH: Yes, exactly. Exactly. And our next podcast is gonna take a look at voluntary carbon markets, how and why they’re being used by the commodities industry. So stay tuned for that episode. Will, I think we better wrap it up now, but thank you as ever. It’s been really interesting and fun to catch up. 

WA: Yeah, absolutely. Thank you for the opportunity. Great to chat.