Tesla is in talks with Canadian mining company Giga Metals about the possibility of a 40-year contract to supply low-carbon nickel for its batteries.
Reuters learned about this from three different sources at once. Elon Musk is true to his word in July this year when he pledged to enter into a long-term, very weekend deal with a mining company that will provide Tesla with cheap raw materials for batteries.
“Tesla will give you a giant, long-term contract if you mine nickel efficiently and environmentally friendly,” Musk said in July. Naturally, the price of raw materials is also a key parameter.
Canadian company Giga Metals meets Musk’s requirements in the best possible way. It has a license to develop the Turnagain field in British Columbia, which greatly simplifies logistics – there is no need to transport raw materials for Tesla’s factory in Texas from other continents. And this is a very large deposit – its explored reserves of nickel are estimated at 2.36 million tons, and cobalt at 141 thousand tons. Giga Metals plans to produce 40,000 tonnes of nickel and 2,000 tonnes of cobalt each year over the next 20 years. The total life of the deposit is estimated to be at least 40 years.
Giga Metals also has another important advantage over other mining companies – it is mining environmentally friendly and is ready to use electricity from the nearest hydroelectric power station in the development, as well as offset carbon dioxide emissions by using this gas in waste processing. The slag obtained from nickel mining is supposed to be turned into a building material resembling cement. For comparison: world supplies of nickel are growing now mainly due to the expansion of mining in Indonesia, where production wastes are simply dumped into the ocean.
Tesla is considering providing financing to Giga Metals to expand its operations in exchange for stocks, nickel and cobalt. The specific parameters of the deal were not named, but the general director of the mining company said yesterday that he estimates the development cost of the project at $ 1 billion, excluding energy costs.
The Reuters source believes that the deal will cover the entire life of the mine, that is, at least 40 years.
Tesla’s current capacity is 490,000 electric vehicles a year in the United States and 200,000 in a factory in Shanghai, and two new factories are under construction in Texas and outside Berlin. Together with them, Tesla will overcome the mark of 1 million cars produced per year in 2-3 years. With these plans in mind, access to a reliable source of nickel for promising cobalt-free batteries is a strategically important goal for Musk in the fight against competitors. According to Benchmark Mineral Intelligence experts, by 2030 the demand for nickel for the production of batteries will grow almost tenfold, 30% of the world’s production of this metal will be used for the corresponding needs instead of the current 6%.
It is possible that Tesla’s deal with Giga Metals will be announced on September 22, during Musk’s long-announced and already postponed Battery Day.