China's "Lithium" Dream Partner? The world's most profitable oil company also joins the fray in the lithium carbonate market.

China Energy Net & China Energy Storage learned that multiple foreign media outlets reported recently that Saudi Aramco has signed a lithium demonstration project agreement with US oilfield service firm NESR, to invest in and build a battery-grade lithium carbonate demonstration project in the Saudi desert region.

The project is designed with an annual output of 2,000 tons of battery-grade lithium carbonate, which is scheduled to be completed and put into operation at the end of 2027. The whole project is constructed on a turnkey basis, with a total contract value of up to about 200 million US dollars.

Saudi Aramco is a global leading oil enterprise. In the first half of 2026, the company's net profit reached as high as 67.2 billion US dollars, a year-on-year increase of 29.2%; its full-year net profit in 2025 was 92.8 billion US dollars. Although it declined compared with previous years, it remains the most profitable oil company in the world.

The entry of the world's most profitable oil company into the lithium carbonate market has naturally drawn extremely high attention from the whole industry.

In addition, against the current backdrop of global energy transition, lithium carbonate has become the focus of competition among all countries. As this oil giant acts as a "catfish" to disrupt the market, what changes will take place in the lithium carbonate market? Will it be a boon or a bane for China?

Innovative Lithium Carbonate Extraction Method

Different from current lithium carbonate players in various countries, Saudi Aramco has taken a unique technical path in this foray into the lithium carbonate sector.

According to NESR, the core technology adopted in this project is NESR's LiThara™ platform, which relies neither on traditional mining nor solar evaporation, but uses direct lithium extraction technology, with raw materials taken from oilfield associated brine.

The whole process is divided into three major links: brine pretreatment, direct lithium extraction, and carbonization to synthesize lithium carbonate, which can selectively separate lithium elements directly from brine and finally produce finished battery-grade lithium carbonate products.

This can be regarded as a new idea for lithium extraction. Prior to this, the mainstream route of brine lithium extraction was still traditional salt lake lithium extraction. For example, salt lakes in South America generally adopt the solar pond evaporation process, which introduces brine into large-scale salt pans, evaporates water through solar exposure, precipitates impurities and then purifies lithium carbonate.

The traditional salt lake solar evaporation process features mature technology and low production cost; however, this method is extremely dependent on climate, requiring sufficient sunshine, occupying large areas of land, and having a long production cycle. The complete production process takes several months, and it is greatly disturbed by seasonal fluctuations such as rainfall, so it is only suitable for development in plateau salt lake resource areas.

In contrast, the DLE direct lithium extraction technology does not require large-scale evaporation and salt drying, greatly reduces the land occupation, and even shortens the production cycle to a few days, with fewer constraints on site conditions. Regions without plateau salt lake resources such as Saudi Arabia can also use brine produced by oilfields to carry out lithium resource recovery.

China Energy Net & China Energy Storage noted that as early as 2024, Saudi Aramco and the Abu Dhabi National Oil Company had already explored DLE technology. Meanwhile, another oil giant ExxonMobil is also actively deploying DLE-related technologies. At that time, the industry generally believed that DLE was in the early stage and commercialization was difficult to achieve. Now two years have passed, this technology may have made new breakthroughs, which is why Saudi Aramco dares to invest 200 million US dollars to expand this business.

It is worth mentioning that, among all current lithium carbonate extraction technology routes, brine lithium extraction has the lowest cost. For example, the gross profit margin of lithium carbonate products of Zangge Mining, a domestic salt lake lithium extraction giant, once exceeded 95%, comparable to that of Moutai. This is also an important reason why Saudi Aramco dares to place such a large bet on this business.

Will It Be Beneficial to China?

For Saudi Aramco, deploying lithium carbonate business is not a simple cross-sector move.

A large amount of associated brine will be continuously produced during the exploitation of major oilfields in the Middle East. In the past, these associated brines were classified as oilfield production waste that required special treatment. The DLE technology essentially converts the waste liquid that would have been treated into key raw materials for lithium batteries. Saudi Aramco's "waste recycling" in this move can be described as killing two birds with one stone, and can even improve the company's performance.

China Energy Net & China Energy Storage noted that nowadays, under the background of global energy transition, lithium is known as the "white oil" of the electric era and has been classified as a key strategic mineral by many countries.

As early as 2017, the United States began to build an exclusive "small circle" around the key mineral supply chain. In June 2022, the United States also took the lead in forming the Minerals Security Partnership (MSP), whose member states include Australia, Canada, France, Germany, Japan, South Korea, etc., focusing on the whole industrial chain collaboration of lithium, cobalt, nickel and other varieties. In August this year, Chile, Argentina, Bolivia and Peru in South America signed a joint statement to strengthen regional cooperation in the field of strategic minerals among the four countries, focusing on minerals such as copper and lithium. Not long ago, Zimbabwe in Africa also announced that it will ban the export of lithium concentrate from January 1, 2027, requiring enterprises to build lithium sulfate processing plants within its territory.

China is a major country with lithium resources and also a major lithium consumer. Data shows that from January to August this year, China's cumulative import volume of lithium carbonate reached 236,400 tons, a year-on-year increase of 54.08%. This data shows that China's lithium carbonate supply is becoming more and more dependent on foreign countries. If this data continues to rise, China may be "strangled" by the overseas market.

China Energy Net & China Energy Storage noted that the lithium carbonate project invested and built by Saudi Aramco this time has an annual output of only 2,000 tons, which can hardly make any waves in the global market, and it is difficult to change the overall global lithium supply and demand situation in the short term. However, once the DLE process is locally verified to be feasible and its cost is proven, a large amount of oilfield brine in the Middle East may become a new source of lithium.

For the global lithium battery industry chain, the supply sources of lithium resources will be more diversified in the future, and new changes will take place in the supply chain, which may be a good thing for China. It is worth mentioning that China is an in-depth participant in the energy transition process in the Middle East, and Chinese enterprises are involved in landmark projects such as the Red Sea Project. Saudi Aramco also has extensive business interactions with Chinese enterprises, and their cooperation has long gone beyond oil trading, penetrating into equity investment and many other fields. Based on this, Saudi Aramco may become an ideal lithium partner for China.

It can be said that this demonstration project of Saudi Aramco, no matter for itself, for China or for the global lithium carbonate market, has far greater strategic value than the contribution value of its actual production capacity.

This article is from the WeChat Official Account "China Energy Storage", author: Xiao Meng, authorized for release by 36Kr.