(Reuters) -Argentina's state energy company YPF on Monday said it is partnering with Israel-based firm XtraLit to jointly develop direct lithium extraction (DLE) projects in the South American country.

Lithium demand has been surging globally, driven by lithium-ion batteries' role in electric vehicles (EVs), portable electronics and increased adoption of renewable energy storage solutions.

Following two years of significant drops, lithium prices are expected to stabilise in 2025, as shuttered mines and robust EV sales in China soak up the oversupply.

"Partnering with XtraLit enables us to advance sustainable technologies that align with new global standards and enhance Argentina's role in the lithium segment," said Eduardo Vallejo, general manager of YPF Tecnología S.A., a subsidiary of YPF through which the deal has been signed.

XtraLit's DLE technology utilizes an eco-friendly ion-exchange procedure to extract lithium from brine resources with both high and low concentrations, and has been implemented in projects in the Middle East and North America.

YPF said the collaboration is also expected to attract foreign investments.