Gulf Oil Titans Saudi Aramco, Adnoc Eyeing Lithium

Saudi Arabia and the United Arab Emirates’ state-owned oil companies aim to extract lithium from brine within their oilfields, as part of their strategy to diversify economies and capitalize on the rise of electric vehicles (EVs).

Saudi Arabia, traditionally dependent on oil, has allocated billions towards becoming a center for electric vehicles (EVs) in line with Saudi Crown Prince Mohammed bin Salman’s pursuit of alternative sources of wealth.

Exxon Mobil and Occidental Petroleum, among other oil firms, intend to leverage emerging technologies to extract lithium from brine, aligning with global efforts to transition away from fossil fuels.

Direct Lithium Extraction (DLE) technology is in its nascent stages, with economics less assured than those of oil.
Nevertheless, Saudi Arabia and the UAE can tap into their experience in handling oil brine and wastewater at production sites.

Filtering the lightweight battery metal from saltwater presents a distinct advantage, bypassing the necessity for costly and environmentally taxing open-pit mines or extensive evaporation ponds, as seen in major producers like Australia and Chile.

China remains the foremost processor and consumer of lithium, essential for electric and hybrid vehicles.
Concentration and the Collapse of Prices
Currently, the global economic downturn has dampened demand for new vehicles, causing a sharp decline in lithium prices.

Since reaching a peak in November 2022, lithium prices have plummeted by approximately 80%, driven by a combination of reduced electric vehicle (EV) sales and an oversupply in the market. Despite this, major automakers are actively seeking new lithium sources in anticipation of future demand.

Analysts have indicated that the electric vehicle (EV) industry will continue to rely on lithium for the foreseeable future, despite ongoing research into cheaper battery technologies that use less or no lithium.

However, a challenge with extracting lithium from brine is the potential for very low concentration levels, further complicating already uncertain economics.

Due to Saudi Arabia’s substantial oil wealth, it has the capacity to undertake financial risks, and its diversification strategy includes positioning itself as a hub for electric vehicles (EVs), leveraging any lithium it produces.

The kingdom has introduced its own EV brand, Ceer, and has constructed an EV metals plant. Additionally, its sovereign wealth fund, the Public Investment Fund (PIF), aims to manufacture 500,000 EVs annually by 2030.

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