Unlock the Editor’s Digest totally free
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
Saudi Aramco, the world’s largest oil firm, is to broaden its investments in lithium manufacturing within the race to construct a provide chain for the metallic important for batteries to energy electrical vehicles.
China controls about two-thirds of the market in lithium processing, however an growing variety of western and Center Japanese corporations are investing in creating their very own provide chains.
The corporate goals to commercially produce the metallic in a joint challenge with state-owned mining firm Ma’aden by 2027 as a part of broader strikes to grow to be a mining hub and diversify from oil.
“We count on that this partnership will leverage the world’s main upstream enterprise . . . with a view to assembly the dominion and probably the world’s projected lithium demand,” Nasser al-Naimi, Saudi Aramco’s president of exploration and manufacturing, stated in an announcement.
The corporate stated lithium demand within the kingdom is anticipated to develop 20-fold between 2024 and 2030, contributing to an estimated 500,000 electrical automobile batteries and 110 gigawatts of renewable power sources.
The nation has plans for lithium refining and exports, business and mineral assets minister Bandar Alkhorayef instructed the Monetary Occasions earlier.
“Saudi Arabia may be very nicely positioned in processing due to the combination that now we have, ranging from power competitiveness, nice infrastructure by way of industrial cities and ports,” he stated.
Though a brutal downturn in lithium costs due to extra provide has made it tough for western teams to compete with China, Saudi Arabia hopes to make use of its monetary muscle and chemical experience to interrupt right into a market that has potential for large returns.
International demand for lithium is anticipated to surge sevenfold by 2040 owing to demand from electrical autos, in accordance with projections within the Worldwide Power Company’s Internet Zero state of affairs.
The dominion is constructing an EV manufacturing hub in King Abdullah Financial Metropolis on the Crimson Coastline.
American EV maker Lucid Motors, majority owned by Saudi Arabia’s sovereign wealth fund, started assembling vehicles within the nation in 2023.
The Public Funding Fund (PIF) plans to launch its personal EV model and signed with Hyundai to construct a facility in King Abdullah Financial Metropolis.
The dominion additionally needs to broaden its mining and metals sector as a part of bigger plans to diversify the financial system from its dependence on oil revenues.
Final month Saudi Aramco, Saudi lithium start-up Lihytec and state-owned miner Ma’aden introduced the nation’s first profitable extraction of the mineral from oilfield brine.
The mineral is broadly discovered within the Earth’s crust, however it’s also current within the brines that accompany oil manufacturing.
“We’ve probably not seen Saudi Arabia play a lot of an element within the battery uncooked supplies or lithium area usually thus far,” stated Daisy Jennings-Grey, head of costs at knowledge supplier Benchmark Mineral Intelligence.
The problem for brand spanking new lithium tasks, she stated, is that they have to be vertically built-in, the place the producer has management over the uncooked supplies, distribution and gross sales to be economically viable.
Two lithium processing amenities are within the planning phases within the nation.
European Lithium introduced in 2023 that it will construct a lithium hydroxide facility in Saudi Arabia, along with the Obeikan Funding Group, which can course of lithium rock mined in Austria.
EV Metals Group can also be planning a lithium facility in Yanbu Industrial Metropolis, backed by personal fairness agency RCF.
ExxonMobil and Occidental are each engaged on lithium growth and Norway’s Equinor final 12 months purchased a forty five per cent stake in two US lithium tasks.
Power corporations have been a pure match for creating lithium manufacturing from brine as a result of most of the core expertise used to provide oil, equivalent to pumping, processing and reinjecting fluid underground, are key for producing the mineral.
Some oilfield brines, that are produced alongside oil and fuel, are naturally excessive in lithium.
Nevertheless, the applied sciences for extracting lithium from these brines, often known as direct lithium extraction (DLE), are nonetheless nascent and haven’t been confirmed at industrial scale.
