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Big oil looks set to pour petrol on lithium fire, joining global miners, car makers and governments in driving up asset values

It wasn’t easy to find good news this week as New Zealand kicked off what looks to be another round of interest rate increases, but beneath the gloom there was a little glitter, with lithium shining even as most share prices drifted lower.
By Tim Treadgold
Posted on May 25th, 2023Two events put lithium at centre stage and might even have caused BHP, the big lithium holdout, to reconsider its involvement in an industry which it has been ignoring.
The first event was news that Exxon Mobil, the world’s biggest private sector oil company and long-term BHP partner in the Bass Strait oilfields off the coast of Victoria, has joined the lithium race with a brine drilling project in the U.S. State of Arkansas.
Exxon Mobil’s recognition that it needs to be involved in new energy as well as old energy will see other big oil companies re-engage with mining despite a historic clash of cultures with the entry of big oil highly likely to drive lithium asset values higher.
Rio Tinto, the world's second biggest miner, is the only mining major to have so far dipped its corporate toe in lithium with a series of relatively small investments.
Ken Brinsden, former Pilbara Minerals chief executive and now chairman of Canadian focused Patriot Battery Metals, said during the week that the majors will have to join in soon or risk paying very high prices to buy assets later in the cycle.
The second event which kept lithium in the news was a deal between the Ford Motor Company and the leading lithium producer, Albemarle of the U.S. to secure future supplies of the battery metal.
For the broader lithium sector there are now multiple value drivers with customers clamoring for raw material, big new entrants hunting for assets, and consumers being forced by governments to buy electric vehicles.
Macquarie Bank picked up the theme of merger and acquisition activity in a midweek research note headed “Lithium M&A underway”.
“We expect M&A to continue with the key considerations including access to markets, jurisdiction risks, supply chain synergies and value proposition,” Macquarie said.
Leo Lithium was the star of the sector this week with a strong rise of 10c to 78c after it reported high grade assays of up to 2.01% over 92 metres from a depth of 132m at its Goulamina project in Mali.
Other lithium news included:

• Liontown falling by 15c to $2.58 after a report that it is in talks with 12 banks to finalise funding for its Kathleen Valley project in WA.
• Dreadnought Resources slipping 0.2c lower to 5.6c despite encouraging exploration news at its Tarraji-Yampi project in the Kimberley region of WA and a speculative buy tip from CG Capital Markets which reckons the stock is heading up to 24c.
• Trek losing 0.7c to 6.6c after reporting the raising of $7.5 million to accelerate work on its Tambourah project in WA’s Pilbara region, and
• Core falling 11c to $1.01 despite announcing early work on its BP33 project in the Northern Territory and a buy recommendation from Macquarie with a price tip of $1.30.