Exxon Mobil Corp. has inked a multi-year, non-binding offtake deal to supply South Korean chemical company LG Chem with up to 100,000 metric tons of lithium carbonate, an ingredient for lithium-ion batteries.

The energy company plans to produce lithium utilizing direct lithium extraction technology as it aims to become a leading domestic supplier. Leaning on its conventional oil and gas drilling, subsurface and exploration expertise, Exxon Mobil has said it plans to drill thousands of feet belowground to access brine from which lithium will be extracted and converted into battery-grade material.

Southern Arkansas’ Smackover formation was the site of Exxon’s first lithium drilling campaign.

“America needs secure domestic supply of critical minerals like lithium,” Dan Ammann, president of Exxon Mobil Low Carbon Solutions, said in a news release. “Exxon Mobil is proud to lead the way in establishing domestic lithium production, creating jobs, driving economic growth and enhancing energy security here in the United States.”

As part of the nonbinding agreement announced Nov. 20, Exxon will supply lithium from its planned project to LG Chem’s cathode plant in Clarksville, Tennessee. With an expected annual production capacity of 60,000 tons, the $1.6 billion cathode manufacturing facility will be the largest of its kind in the U.S. when its first phase begins operations in 2026. The facility, located on a 1.7 million-sq m site, will produce enough cathode materials for about 600,000 electric vehicles (EVs) with a range of 500-km annually, the company has said.

LG Chem has already lined up long-term supply agreements for cathode materials with General Motors and Toyota.

“Building a lithium supply chain with Exxon Mobil, one of the world’s largest energy companies, holds great significance,” said LG Chem CEO Shin Hak-cheol. “We will continue to strengthen LG Chem’s competitiveness in the global supply chain for critical minerals.”

While LG Chem broke ground on its plant in December 2023, a final investment decision (FID) has not been taken for Exxon’s planned project. The company said FID will be “subject to various factors including the establishment of commercially competitive regulatory frameworks.”

With the Trump administration set to return to the White House along with a Republican-dominated Congress, the energy community awaits the fate of parts of the Inflation Reduction Act (IRA) that has incentivized clean energy developments.

The IRA, which at nearly $370 billion marked the largest U.S. investment in clean energy and climate-related programs, includes several tax credits aimed at the EV market. These include the clean vehicle credit for individuals and businesses and the 45X credit for manufacturers of battery cells, battery modules and battery materials.

However, President-elect Donald Trump’s team has indicated plans to kill the consumer tax credit for EV purchases, slowing the transition and taking a scalpel to one of President Joe Biden’s signature pieces of legislation.

Exxon Mobil earlier this year signed a nonbinding agreement with battery maker SK On for up to 100,000 metric tons of domestically sourced Mobil Lithium. The battery manufacturer operates two battery plants in Georgia and is building four more in partnership with Ford Motor Co. and Hyundai Motor Group.

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