Tesla has decided to become a technical partner in a nickel mine – needed for lithium-ion batteries that power electric cars.
Elon Musk’s car company will also buy nickel from the Goro mine on the small island of New Caledonia in the Pacific Ocean to secure long-term supplies.
The move comes amid growing concerns about future nickel supplies.
New Caledonia is the world’s fourth largest nickel producer, rising 26% in price over the past year.
“Nickel is our biggest concern for the scale of lithium-ion cell production,” Musk said on Twitter last month.
New Caledonia is a French overseas territory, although increasing calls for independence have been seen.
What is the Goro Mine?
New Caledonia’s large nickel reserves are crucial to the local economy, and the Goro mine in the south of the island could be one of the largest nickel producers in the world.
In December, its owners, the Brazilian mining giant Vale and the French state, tried to sell it to Swiss commodity trader Trafigura.
Residents were so angry about the loss of local ownership and control that it led to the collapse of the New Caledonian government and led to workers going on strike.
A new deal announced Thursday by independent groups, loyalist parties and indigenous Kanaks will sell the mine to a consortium that now includes employees as well as three regional provinces. Trafigura will only hold 19%.
According to the agreement, Tesla will be involved in a ‘technical and industrial partnership’ to help with product and sustainability standards, as well as taking nickel for the manufacture of batteries.
This will play the role of technical consultant in designing and improving the manufacturing process.
Vale said the agreement would “enable the operations to continue on a sustainable path for the future, which will retain jobs and deliver economic value to the country”.
Greater control
While Tesla will not have a shareholding, its partnership in the mine gives it greater control over its supply chain for electric batteries as it boosts production.
Nickel is mostly mined in Russia, Canada, New Caledonia and Indonesia and is mainly used to make stainless steel. But the growth in electric vehicles has added a new source of demand for metal.
The extraction of nickel, especially the use of coal power, entails environmental and health costs and mines are repeatedly criticized by critics.
In Thursday’s agreement, strengthening of environmental standards was set and the goal was set for the mining complex to be carbon neutral by 2040.