May 6, 2021

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Tesla to become advisor on nickel project to secure key metal

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Tesla has agreed to buy nickel from a mine in New Caledonia in order to secure its supply of battery metal, which its chief executive Elon Musk called the group’s “biggest concern”.

The electric car maker will become a technical advisor at the Goro mine on the Pacific Island and will also source long-term nickel from the project under a deal with the New Caledonian government, according to a person with direct familiarity. with the subject. .

The move comes amid growing concerns over future nickel supplies, following a 26% rise in metal prices over the past year and growing investment by Chinese companies in Indonesia. Nickel is required for the most powerful lithium-ion batteries used in electric vehicles.

“Nickel is our biggest concern for scaling up lithium-ion cell production,” Musk said on Twitter last month.

New Caledonia is one of the largest nickel producers, but in December protests by groups seeking independence from France for the island delayed the sale of the loss-making Goro mine and refinery. by Brazilian miner Vale to a consortium called Prony Resources.

The agreement reached in New Caledonia with representatives of the independence movement on Thursday will allow the sale to materialize and give 51% of the project to state entities based in the territory, according to a Reuters report citing the text of the agreement. published by The political parties of New Caledonia. Commodity trader Trafigura will hold a 19 percent stake, according to the Switzerland-based company.

Vale said in a statement that the agreement “would allow operations to continue on a sustainable course for the future, preserving jobs and bringing economic value to the country.”

Although Tesla will not have a stake in the capital, its close involvement in the mine indicates its efforts to have better control over its entire supply chain, from mine to battery, as it accelerates the production. A spokesperson for Tesla in the UK declined to comment on the news.

Tesla last year agreed to buy cobalt, another battery metal, from Swiss miner Glencore.

Nickel, which is mainly mined in Russia, Canada, New Caledonia and Indonesia, is mainly used to make stainless steel. But the growth of electric vehicles adds a new source of demand for the metal.

While Chinese companies have invested heavily in new nickel projects in Indonesia in recent years, the process of mining and processing nickel uses energy produced by coal.

“The only additional tonnage of nickel comes from Indonesia, but the problem with Indonesia from an ESG point of view is that it may not meet Tesla’s criteria,” said Jim Lennon, analyst at Macquarie. . “Tesla is far behind in securing units and the Chinese are done.”

Chinese stainless steel producer Tsingshan said on Tuesday it had signed an agreement to sell 100,000 tonnes of nickel to two Chinese battery materials companies, Huayou Cobalt and CNGR Advanced Material.

The Chinese company said it started producing higher purity nickel at its factory in Indonesia last July, a form suitable for electric vehicle batteries, according to a statement on its official WeChat account.

Following the news, nickel prices fell 8 percent on Thursday, as traders bet Indonesian nickel would ease any shortages in the market.

Nickel last traded at $ 16,290 per tonne, down 13% this week.



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