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ExxonMobil to supply SK On with up to 100k tons of lithium

Published 26-06-2024, 12:04 am
© Reuters

SPRING, Texas - ExxonMobil (NYSE: XOM) has announced a non-binding memorandum of understanding with electric vehicle (EV) battery developer SK On, signaling a potential multiyear supply deal for up to 100,000 metric tons of domestically sourced lithium. This lithium will be used in SK On's U.S.-based EV battery manufacturing, aligning with ExxonMobil's aim to provide lithium for about one million EV batteries annually by 2030.

The partnership underscores a growing demand for lithium, a critical component in EVs, energy storage systems, and other clean energy technologies. ExxonMobil plans to extract lithium from underground saltwater deposits in Arkansas, converting it to battery-grade material on-site. This project is expected to enhance lithium production efficiency and reduce environmental impacts compared to traditional mining methods.

Dan Ammann, President of ExxonMobil Low Carbon Solutions, emphasized the company's role in advancing energy security and climate objectives through this collaboration. ExxonMobil's expertise in subsurface exploration, drilling, and chemical processing is set to offer a secure, lower-carbon lithium supply for U.S. EV battery manufacturers.

SK On operates two battery plants in Commerce, Georgia, with additional plants under construction through joint ventures with Ford Motor Co . (NYSE:F) and Hyundai Motor (OTC:HYMTF) Group. Post-2025, SK On's U.S. production capacity is projected to exceed 180 GWh annually, powering roughly 1.7 million EVs.

Park Jong-jin, Executive Vice President of Strategic Procurement at SK On, highlighted the partnership's role in strengthening U.S. battery supply chains and leading regional electrification efforts.

In other recent news, the Exxon Mobil-led consortium in Guyana, including Hess Corp (NYSE:HES) and CNOOC (NYSE:CEO) Ltd, reported a significant financial growth in 2023, with a net margin of 56%. The consortium's revenue increased by 23% from the previous year, totaling $11.25 billion, primarily due to the addition of a third production vessel. The partnership garnered $6.33 billion last year, with Hess Corp experiencing the most significant profit growth among the three partners.

Meanwhile, the anticipated acquisition of Hess Corp by Chevron (NYSE:CVX) for $53 billion is currently delayed due to an incomplete arbitration panel. The dispute centers around whether Exxon Mobil (NYSE:XOM) holds a right of first refusal over Hess's Guyana operations. The decision on this matter may be pushed beyond this year, resulting in uncertainty for all parties involved.

In other developments, Exxon Mobil, a member of the American Petroleum Institute (API), is facing challenges from the API and the National Corn Growers Association over new truck emission standards implemented by the Biden administration. The regulations aim to reduce greenhouse gas emissions by 1 billion tons through 2055.

A U.S. judge recently ruled in favor of activist investor group Arjuna Capital, dismissing a lawsuit brought by Exxon Mobil. The case was dismissed after Arjuna Capital agreed not to submit future proxy filings at Exxon's annual shareholder meetings.

Lastly, California Attorney General Rob Bonta is pursuing profits from Exxon Mobil and other major oil companies, alleging that they misled consumers about their impact on climate change. This legal action follows the enactment of a law allowing the state to pursue profits gained through unfair competition and false advertising violations.

InvestingPro Insights

As ExxonMobil (NYSE: XOM) positions itself strategically within the electric vehicle (EV) ecosystem through its partnership with SK On, investors are keeping a close eye on the financial health and market performance of the energy giant. According to real-time data from InvestingPro, ExxonMobil boasts a robust market capitalization of $449.86 billion, underscoring its significant presence in the industry. The company's Price to Earnings (P/E) ratio stands at a competitive 14.01, with an adjusted P/E ratio for the last twelve months as of Q1 2024 at an even more attractive 12.9.

InvestingPro Tips highlight ExxonMobil's stability and long-term shareholder value, as evidenced by its impressive track record of raising its dividend for 41 consecutive years. Additionally, the company is recognized as a prominent player in the Oil, Gas & Consumable Fuels industry, with cash flows that can sufficiently cover interest payments. These factors are particularly relevant for investors considering the company's role in the burgeoning EV market and its recent moves to diversify into lithium supply for EV batteries.

Furthermore, the company's dividend yield as of 2024 stands at 3.33%, reflecting its commitment to returning value to shareholders. Despite a revenue decline of 15.61% over the last twelve months as of Q1 2024, ExxonMobil's solid fundamentals and strategic pivots suggest a resilient outlook. For investors interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/XOM, which can be accessed with an exclusive 10% discount using the coupon code PRONEWS24 on a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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