Tesla Inc has signed its first nickel supply agreement in the United States, selecting Talon Metals Corp’s Tamarack mining project in Minnesota because of intentions to create the electric car battery metal in a more environmentally benign manner.
The agreement, which was announced on Monday, comes as demand for nickel is predicted to rise dramatically over the next decade as electric vehicles become more common. Nickel improves energy storage in a battery’s cathode, extending the range of an electric vehicle.
Elon Musk, the CEO of Tesla, pleaded with the mining sector in 2020 to produce more nickel “in an environmentally appropriate manner.” Musk also called nickel production in the United States “objectively quite lame.”
Musk secures a crucial U.S. source of the metal for Tesla battery facilities in Texas and Nevada by sourcing from Talon’s Minnesota project, a joint venture with Rio Tinto planned to open by 2026, while also decreasing the company’s supply lines. Last year, the automaker secured nickel supply agreements with BHP and BHP.AX in Australia, as well as New Caledonia.
Although Indonesia is the world’s top nickel producer, miners there often utilize energy-intensive technologies to extract the metal and engage in controversial waste disposal techniques such as dumping waste rock into waterways.
Talon Metals intends to deploy technology that it expects will allow it to absorb carbon dioxide from the atmosphere and chemically link it to rocks discovered inside its Tamarack project in northern Minnesota, allowing it to store it forever. The technique, which is currently being tested, would basically allow Talon to offer nickel as carbon-neutral, which would be a significant selling point for Musk and Tesla.
In a press statement, Tesla executive Drew Baglino stated, “Responsible sourcing of battery materials has always been a concern for Tesla.”
Tesla intends to purchase 75,000 tons of nickel concentrate, as well as smaller volumes of cobalt and iron ore, at LME-listed prices over the next six years. Tesla hasn’t said where the nickel concentrate will be refined yet. There is no nickel refinery in the United States.
Just before the news was revealed, Talon’s stock was stopped. Tesla’s stock increased by 3% on Monday.
Talon’s CEO, Henri van Rooyen, stated in a statement, “Talon is thrilled to help Tesla’s objective to accelerate the transition to renewable energy.”
Piedmont Lithium Inc agreed to supply the automaker with lithium for its Texas battery factory in 2020, but the arrangement was halted last year due to mounting resistance in North Carolina to Piedmont’s proposed plant.
