If Saudi Arabia is known for anything globally, it is the endless supply of oil that it provides to the world, a commodity that has turned simple shepherds into billionaires and elevated the economic landscape of the entire region. A simple purview may assume perpetual prosperity, but economically speaking, it’s a curse to be so overly dependent on one commodity. It’s called the “Dutch Disease.” The overreliance causes the currency to appreciate and makes it difficult to become competitive in any other export industry.
The Kingdom and the Gulf, in general, have tried to diversify; some lean toward tourism or creating financial institutions, but Saudi Arabia has seemed to lag behind, spending sporadically on expensive footballers, fantastical mega projects, or promising technologies. This is all a part of their “2030 Vision” to diversify the economy and strengthen the nation.
Some may argue that simply sticking with oil, a bedrock of industrial society, won’t be discarded so quickly, but the truth is that demand for crude oil is plummeting. According to a report by the World Bank, the global oil supply is expected to exceed demand by an average of 1.2 million barrels per day. OPEC is already overproducing, and the modern world is moving towards electric and more sustainable alternatives.
Saudi Arabia Finds Lithium Reserves within its Oil Fields Near the Sea
But it seems that Saudi Arabia is once again in luck; in the burgeoning electric age, they’ve found significant lithium reserves within its oil fields near the Persian Gulf. Lithium is the primary component of electrical batteries, which powers all kinds of electronics, from phones to laptops and batteries used in electric vehicles and grid storage. Lithium-ion battery demand is projected to grow by 26% year-on-year in 2024, reflecting the ameliorating demand for electric vehicles and the stationary storage market.
Even better news for the Kingdom is that a domestic startup launched by King Abdullah University of Science and Technology by the name of Lithium Infinity, also known as Lihytech, will lead the extraction project in collaboration with national mining companies Aramco and Saudi Arabian Mining Company (Maaden).
The process of extraction was said to be innovative and novel since Lithium extraction from brine was usually done from saltwater brine. In fact, the majority of today’s commercial lithium production comes from those that extract Lithium from underground brine reservoirs.
The process is relatively simple but expensive and more time-consuming than the alternative of hard mining. It starts by pumping saltwater brine from underground to the surface and into large evaporation ponds. Over several months, the water gradually evaporates, and different salts are removed as they crystallize. What’s left behind is a brine with a high concentration of Lithium, which can then be processed further to extract lithium compounds.
But what the Kingdom is doing is extracting Lithium from brine produced in oil fields instead of traditional saltwater brine. Its new approach is being piloted around the world due to the surge in lithium demand. Pilot plants for lithium recovery from oilfield brines have been established in the USA, Canada, China, and Russia. Standard Lithium is testing over 150,000 acres of brine operations in Arkansas and developing additional leases in California and Arkansas. PetroChina built a pilot plant producing 50 tons of lithium carbonate annually.
Even other oil companies, such as Exxon Mobil and Occidental Petroleum, are planning to capitalize on emerging technologies to filter Lithium from brine as the world seeks to limit their consumption of fossil fuels. The Vice Minister of Industry and Mineral Resources for Mining Affairs in Saudi Arabia, Eng. Khalid Saleh Al-Mudaifer stated that they are building commercial pilots at the oil fields, so the brines that come out of the field will feed into this commercial pilot on a continuous basis.
He also added that the plan was still currently expensive but, given a rise in lithium price, could become viable as a source of consistent extraction. His goals are ambitious, stating that production should ramp up to make a million batteries a year sufficiently. Production goals seem to be centered around meeting domestic markets as well as making it viable to export to international markets.
The world is preparing for a post-oil world, and it seems the Kingdom of Saudi Arabia will not be left behind. Given the generous governmental support, the pilot can still operate under subsidies until the eventual price hike is met. The government has spent billions on the burgeoning EV market, and this pilot could be the start of potentially sponsoring this dream. It can’t be said assuredly that this will fully shift the Saudi Arabian economy since lithium content in oil field brine is relatively lower than traditional means, but the excess of oil fields in the Kingdom may make up for this dearth. It’s still too early to state any major revelations or predictions, but the Kingdom has made a strong stride to capitalize on the EV market, which could be the catalyst for further economic developments.
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The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
The author is studying Economics at the National University of Science and Technology (NUST) with a keen interest in financial affairs, international relations, and geo-politics.