Reports on a few different matters on Tesla mining and batteries have been leaking out lately — since Battery Day, basically. We’ve covered a couple of them individually, but there are three that I’m looping together for one piece here.
Vale × Tesla
One of the largest mining companies in the world, Vale, is reportedly in talks with Tesla about providing the company with nickel from operations in Canada.
“Tesla and other automakers need to ensure there is sufficient nickel available to produce the number of batteries required for EVs over the next five to eight years, Mark Travers, Vale’s executive director of base metals, told Reuters.” He noted they are having those conversations with Tesla right now. Additionally, basically the same conversations are happening across the industry.
“Vale, whose Canadian operations span three provinces, is in the midst of expanding its Voisey’s Bay site to an underground operation that will produce about 40,000 tonnes of nickel-in-concentrate per year,” Reuters added.
With Tesla and others, there is a heavy focus on “environmentally friendly nickel.” In Vale’s case, it has reportedly invested $2 billion into low-carbon projects, such as “electrification of underground vehicles, fuel switching and heat recovery.”
Tesla × Indonesia
Reuters also has a report that Tesla may invest in Indonesia to help get the nickel it needs in the coming decade for its enormous battery production and electric vehicle production plans.
“Indonesia is keen to develop a full supply chain for nickel at home, especially for extracting battery chemicals, making batteries and eventually building EVs,” Reuters writes.
“It has stopped exports of unprocessed nickel ore to support investment in its domestic industries.”
How that relates to Tesla seems to be in the early stages of development, with the Silicon Valley–based company reportedly reaching out to the Indonesian government to consider an investment there. “Ayodhia Kalake, a senior official at the Coordinating Ministry for Maritime and Investment, said Tesla had reached out to the government informally about a possible venture, but he did not specify what it had in mind.”
Tesla × LG Energy Solution
LG Chem is spinning off a battery-focused company, LG Energy Solution. Reportedly, Tesla is looking to acquire 10% of it in order to have a solid, secure, long-term battery supply from what is often considered (or objectively ranked) the largest EV battery producer in the world. “LG Chem’s global EV battery market has spiked from 11 percent last year to over 25 percent as of July this year. It outpaced both CATL and Panasonic.”
Tesla may be looking to acquire a 10% stake in LG Energy Solution, the battery-making division soon to be separated by LG Chem, in order to procure a stable supply of batteries, bank sector sources told The Korea Times on Monday
— JPR007 (@jpr007) September 28, 2020
According to The Korea Times, the LG Energy Solution spinoff is supposed to be coming in December.
LG Chem (LG Energy Solution soon) is jointly developing a large battery factory with GM in Ohio, in order to produce Ultium batteries for GM vehicles.
Tesla needs a lot of batteries, and a lot of minerals for those batteries. It takes years to set up mining capacity, and then a bit longer to construct battery factories. With bold plans for the future of the company, Tesla is looking to make sure that it doesn’t drive into a battery wall — it needs the battery supply to keep flowing rapidly. A diversified approach in terms of battery suppliers is helpful for that, just in case a major supplier runs into a problem.
I have written and hosted a podcast about a catch-22 issue in the battery industry (see above) — electric vehicle producers and battery producers need mining for battery materials to ramp up, but they often don’t want to commit to specific investments to help finance that scaling up. Analysts who I discussed this with — multiple times — expressed concern on the whole regarding this matter, but they also said that since Tesla has been closely involved in the development of batteries for years and has a strong team focused on this, it is likely to secure the supply it needs for its planned growth. These deals above are a “hat trick” showing that Tesla is getting its ducks lined up in terms of securing its battery supply chain.
In the stories above, assuming the reporting is accurate, you have Tesla working to secure a solid supply of nickel while also looking to invest into the world’s largest electric vehicle battery producer. There is surely much more to come.
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