Mining lithium – and developing new technologies for the more efficient sourcing, refining and recycling of this important mineral, has become a huge industry, along with others in the energy transition. What role is there for energy companies in the Middle East?
There are two types of battery used in electric cars, but they share an element in common: Lithium. Chinese manufacturers favour lithium iron phosphate batteries, known as LFP, while lithium nickel manganese cobalt (NMC) batteries are preferred in the West. Lithium is also used in giant batteries used for storing electricity by wind and solar power, ready for releasing upon demand.
As the energy transition continues, mining and refining lithium is becoming to the 21st century what oil exploration and development was to the 20th.
Lithium is the lightest metal, with an atomic number of just 3. It is highly reactive – pure lithium burns upon exposure to water. Hence it is found naturally in compound form, including in many salt lakes in South America, and also in the ore known as spodumene. There are considerable global deposits, but the extraction and purification process is costly and energy-intensive, and the industry can be polluting, depending on how responsibly the operation is run.
The rise of electric-powered transportation, and other non-fossil fuel technologies, represents a challenge to oil and gas companies. Yet it is also an opportunity, because many of the core skills required in lithium production are already part of their core competence. The oil giants have expertise in geology, mapping of reservoirs, precision drilling and refining. The regulatory and environmental protection measures in oil exploration and lithium mining have similarities.
The oil giant ExxonMobil has drilled its first lithium well in Arkansas, USA. It has signed an agreement with SK On, a South Korean manufacturer, to supply lithium for its lithium-ion batteries, to be fitted in Ford and Hyundai electric vehicles.
There is considerable scope for reducing the environmental impact and improving economic efficiency in lithium extraction. The conventional method involves using large evaporation ponds in places where lithium compounds are found naturally in brines, such as in Bolivia, Argentina and Chile. This is a slow process, resulting in only around 30% of the lithium in the brine becoming usable.
ExxonMobil and other oil companies are investing in ways to improve the process. A polymer membrane has been developed that, according to projections, should be able to extract 90% of lithium from brine, in a process using less space, by filtering out other metals such as potassium.
In the Middle East, oil and gas companies are also investing heavily in the energy transition. Given the global scope of the sovereign wealth funds, the lithium industry ought to be considered as a sector worthy of investment.
At the beginning of 2024, Saudi Aramco, the world’s biggest oil company, owned by Saudi Arabia, announced an additional $4bn of venture capital funds for Aramco Ventures, more than doubling the amount available, to $7bn. It will be invested in new energy sources, chemicals, transition materials and digital technology.
In October 2022, Qatar announced an additional QR2.3bn investment in solar power plants in Mesaieed and Ras Laffan, approximately doubling the total solar power investment to QR4bn. The huge Al Kharsaah solar energy plant will produce around 10% of Qatar’s energy needs.
QatarEnergy has also made investments in salt technology. This does not involve lithium, but there will be economic and environmental savings resulting from smarter use of resources and moves towards a circular economy. It has entered a joint venture with Mesaieed Petrochemical company, Qatar Industrial Manufacturing Company and other strategic partners to recycle waste water from desalination processes, extracting usable salts. This will reduce the need to import both industrial salts, used in the petrochemical industry, and table salt. The investment is QR1bn. QatarEnergy has continued to invest in oil and gas, last year purchasing two Canadian offshore exploration blocks from ExxonMobil.
During the energy transition, the profits for oil and gas producers in the Middle East are huge. The oil reserves, as well as being vast, lie near the surface and are relatively inexpensive to extract. Saudi Aramco, for example, is the second-largest company in the world by revenue, after the retail giant Walmart, and the revenue per employee is a staggering $8.5mn. It is the responsible thing to do to invest these windfall profits in diversification of energy sources, and of the economic base for the region. This makes sense for economic, social and environmental reasons.
The author is a Qatari banker, with many years of experience in the banking sector in senior positions.
Fahad Badar
