Saudi Aramco, the globe’s leading oil company, is set to enhance its investments in lithium production. This move is part of a strategic effort to establish a supply chain for a metal crucial to electric car batteries.
Currently, China dominates around two-thirds of the lithium processing market. However, there’s a growing trend among Western and Middle Eastern enterprises to develop independent supply chains. Aramco plans to commercially produce lithium in collaboration with the state-owned Ma’aden by 2027, aligning with broader goals to diversify from oil.
We expect this partnership will leverage the world’s leading upstream enterprise
, stated Nasser al-Naimi, president of exploration and production at Aramco. The demand for lithium in Saudi Arabia is projected to grow substantially, potentially fueling 500,000 electric vehicle batteries and generating 110 gigawatts of renewable energy.
Saudi Arabia is poised to refine and export lithium, bolstered by its competitive energy landscape and robust infrastructure. Despite a downturn in lithium prices affecting Western competitors, Saudi Arabia aims to capitalize on its financial resources and chemical expertise to penetrate this lucrative market.
International demand for lithium is anticipated to rise sevenfold by 2040, driven by the electric vehicle industry. The kingdom is developing an EV manufacturing hub on the Red Sea coast, with American EV maker Lucid Motors already assembling cars there. Additionally, the Public Investment Fund (PIF) has plans for an EV brand and a new facility in partnership with Hyundai.
Saudi Arabia’s broader strategy includes expanding its mining and metals sector to reduce economic reliance on oil. Recent successful extraction of lithium from oilfield brine marks a significant step in this direction.
While Saudi Arabia has not historically been a major player in battery raw materials, the country is planning two lithium processing facilities. European Lithium and Obeikan Investment Group will construct a lithium hydroxide plant, and EV Metals Group is planning another facility with private equity backing.
Energy companies are well-suited for lithium production from brine, leveraging skills such as pumping and fluid processing. However, the technology for extracting lithium directly from brine remains in early stages and unproven at large scales.