Source: Wall Street See
Berkshire Hathaway, a subsidiary of Buffett's, has announced that it has formed a joint venture with its heavily-weighted stock, Occidental Petroleum, to commercialize the direct lithium extraction technology (DLE) of Occidental Petroleum, producing high-purity lithium compounds, and advancing both traditional and new energy.
Recently, there has been major news in the new energy industry: Buffett, the stock god, is heavily increasing his investment in the upstream key material of the new energy auto industry chain, lithium. Berkshire Hathaway's$Berkshire Hathaway-A (BRK.A.US)$/$Berkshire Hathaway-B (BRK.B.US)$ has announced that it has formed a joint venture with $Occidental Petroleum (OXY.US)$, focusing on the extraction of lithium resources.
Lithium resources are known as “white oil”，and its importance in the new energy industry cannot be ignored. Occidental Petroleum stated that they will use the geothermal brine resources of Berkshire Hathaway in California to commercialize the production of high-purity lithium compounds using advanced direct lithium extraction (DLE) technology.
It is understood that TerraLithium, a wholly-owned subsidiary of Occidental Petroleum, has a patent for DLE technology, which can convert lithium-containing brine into high-purity lithium. BHE Renewables, a subsidiary of Berkshire Hathaway Energy, operates multiple geothermal power plants in the Imperial Valley of California, which can process large amounts of lithium-rich brine per minute and produce clean energy.
The joint venture has launched a pilot project at BHE Renewable Energy's geothermal facilities to verify the feasibility of producing lithium using TerraLithium DLE technology under eco-friendly conditions. After the pilot project is successful, BHE Renewable Energy plans to build, own, and operate commercial lithium production facilities in the Imperial Valley of California. In addition, the joint venture plans to promote the technology to other regions and develop more commercial lithium production facilities.
Buffett has been paying attention to the potential of geothermal lithium extraction for several years. BHE Renewable Energy's geothermal power plants not only provide a large amount of clean energy to the local area, but also process geothermal brine rich in lithium elements. In 2019, BHE Renewable Energy began to promote geothermal lithium extraction projects. In 2020, the project was approved by the California Energy Commission. If the project is successful, it plans to begin commercial operation this year.
Moreover, Occidental Petroleum is a major holding of Buffett, whose current shareholding ratio has exceeded 34%, and Berkshire Hathaway is the single largest shareholder of Occidental Petroleum. It is reported that Buffett started investing in Occidental Petroleum in 2019, and began to increase his holdings significantly for three consecutive quarters since the first quarter of 2022. In early February of this year, Buffett increased his holdings of Occidental Petroleum for three consecutive trading days, with a total purchase of 4.3 million shares.
Berkshire Hathaway Class A and Class A shares closed up 0.09% at $618,000 on Wednesday.
Occidental Petroleum's stock fell 0.08% to $59.84.
Direct lithium extraction technology has obvious advantages compared to traditional methods. This technology does not require complex ore mining and processing processes, but extracts lithium directly from geothermal brine, greatly reducing energy consumption and environmental pollution, and ensuring that the extracted lithium compounds have high purity to meet the needs of industries such as electric vehicles.
According to a report by Goldman Sachs, direct lithium extraction technology is considered to be a “potential technology that changes the rules of the lithium supply game”. Once scaled up, this technology can shorten the lithium extraction time from months to days, with an extraction rate of 60% to 80%, making it possible to utilize lithium content areas with lower yield.
With the continuous growth of global demand for lithium, more and more oil giants are entering the field of lithium resource development. The International Energy Agency predicts that the use of lithium batteries required for electric cars and energy storage will increase significantly in the next 20 years. The World Economic Forum has predicted that global lithium demand will increase rapidly in the coming years.
In addition to Occidental Petroleum, the US oil giant Exxon Mobil has also entered the field of lithium extraction. Last year, Exxon Mobil announced the launch of a lithium production project in Arkansas, aiming to achieve large-scale production of lithium in the next few years and provide lithium resources for a large number of electric vehicles.
In addition, the national oil companies of Saudi Arabia and the United Arab Emirates also plan to use lithium resources in saltwater for economic diversification and to obtain profits from the global electric vehicle market. Saudi Crown Prince Mohammed bin Salman has promoted economic diversification, investing in the construction of an electric vehicle center, and entering the lithium industry is an important part of its diversified strategy.
Editor/tolk