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GULF OIL GIANTS SAUDI ARABIA AND UAE SET SIGHTS ON LITHIUM

Business

BUSINESS

Gulf oil giants Saudi Arabia and UAE set sights on lithium

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Riyadh is spending billions on EVs as part of Mohammed bin Salman's economic
diversification plans

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Updated On: Sat, 09 Mar 2024 10:08:43 PKT

LONDON/DUBAI (Reuters) – Saudi Arabia and the United Arab Emirates' national oil
companies plan to extract lithium from brine in their oilfields, in line with
efforts to diversify their economies and profit from the shift to electric
vehicles (EVs), three sources told Reuters.

Other oil companies, including Exxon Mobil and Occidental Petroleum plan to take
advantage of emerging technologies to filter lithium from brine, as the world
seeks to move away from fossil fuels.

Saudi Arabia, whose economy for decades has relied on oil, has spent billions on
trying to turn itself into a hub for EVs as part of Saudi Crown Prince Mohammed
bin Salman's attempts to find alternative sources of wealth.

Read more: Is there any lesson to learn from Saudi Arabia?

Three people familiar with the matter said Saudi Aramco and Abu Dhabi National
Oil Company (ADNOC) were in the very early stages of work to extract lithium,
regarded as a critical mineral by many major economies because of its use in
battery manufacture.

They declined to give detail on the type of direct lithium extraction (DLE)
technology that would be used.

Aramco did not respond to a request for comment, Adnoc declined to comment.

The three sources declined to be named because they were not authorised to speak
publicly.

DLE technology is in its infancy and its economics are far less certain than
those of oil.

But Saudi Arabia and the UAE can draw on expertise in handling oil brine and
wastewater at oil production sites.

An advantage of filtering the ultralight battery metal from saltwater is that it
avoids the need for costly and environmentally challenging open pit mines or
large evaporation ponds, as employed in the world's leading producers Australia
and Chile.
China is the biggest processor and consumer of lithium, needed for electric and
hybrid vehicles.

CONCENTRATION AND PRICE COLLAPSE

For now, global economic weakness has depressed buying of new vehicles and led
lithium prices to dive.
Lithium prices have fallen by about 80 per cent since touching a peak in
November 2022 as a slowdown in EV sales exacerbated a supply glut.

Leading carmakers, however, are among those looking for new lithium supplies in
anticipation of future demand.

Analysts have said the EV industry will depend on lithium for years to come,
even though cheaper battery technology alternatives using less or no lithium are
being studied.

An issue with lithium extraction from brine is that concentration levels can be
very low, making already uncertain economics less favourable.

One of the people said Aramco was working on using new filtration technology
that seeks to solve the issue of concentration, while another person said Adnoc
was also addressing that.

Read more: Saudi Arabia to pour billions into Africa for securing metals

Saudi Arabia's oil wealth means it can afford to take a financial risk and its
diversification plans include establishing itself as a hub for EVs to make use
of whatever lithium it produces.

The kingdom has established its own EV brand Ceer, and built an EV metals plant.
Its sovereign wealth fund, the Public Investment Fund (PIF), has a goal to
produce 500,000 EVs annually by 2030.

Saudi Arabian Mining Company (Ma'aden), the Gulf's largest miner, is working to
extract lithium from seawater.

"There is good research in the kingdom with Ma'aden ...and Aramco because the
discharge of the oilfields have good salinity and good traces of minerals,"
Saudi vice minister of industry and mineral resources Khalid bin Saleh
Al-Mudaifer told Reuters on the sidelines of a press conference in Riyadh in
December.

"They have done good work, they have done good extractions of sodium, magnesium,
and traces of lithium. The technologies are in the early stage, but there is
good work and good investment," Al-Mudaifer added.

Related Topics
Saudi Crown Prince
UAE
Saudi Arabia
Technology
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