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Tesla Signs a Secretive Deal With Brazilian Mining Company Vale S.A. to Supply Nickel for EV Batteries, Bloomberg Reports

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【Summary】Bloomberg News reported on Wednesday that Tesla has signed an undisclosed deal with Brazilian mining company Vale S.A. to supply nickel to the electric automaker. Vale is the world's largest producer of iron ore, pellets, and nickel. Demand for nickel is expected to rise with the auto industry's transition to electrification.

Eric Walz    Mar 30, 2022 8:15 AM PT
Tesla Signs a Secretive Deal With Brazilian Mining Company Vale S.A. to Supply Nickel for EV Batteries, Bloomberg Reports

Securing the raw materials required to produce electric vehicle batteries is important to automakers looking to take a lead in global electric vehicle sales. Sourcing raw materials, such as nickel, is even more important for segment leader Tesla, which only produces electric vehicles, so the company is inking deals with mining companies.

Citing sources, Bloomberg News reported on Wednesday that Tesla has signed an undisclosed deal with Brazilian mining company Vale S.A. to supply nickel to the electric automaker. Vale is the world's largest producer of iron ore, pellets, and nickel.

Nickel is used in an electric vehicle battery's positively charged cathode and increases the battery's energy density.

Vale declined to comment on the report, according to Bloomberg, but the company stated previously that it currently sells 5% of its production for electric vehicle batteries, but plans to increase that  amount to 30% or 40%. Demand for nickel is expected to rise with the auto industry's transition to electrification. 

In addition, the current global climate has caused the price of other raw materials for EV batteries to rise, including aluminum, palladium and lithium, so it makes sense for Tesla to want to lock in prices before any further increases.

The nickel would likely come from mines that Vale owns in Canada. Operations at Vale's open-pit mine and concentrator at Voisey's Bay in Labrador, Canada began in 2005. The 6,000 tons-per-day facility produces two types of concentrate: nickel-cobalt-copper concentrate and copper concentrate.

In January, Tesla signed a separate nickel supply deal with mining company Talon Metals. The company was chosen due to its plans to mine nickel in a more environmentally friendly way.

In 2020, Tesla Chief Executive Officer Elon Musk pleaded with the mining industry to produce more nickel "in an environmentally sensitive way."

Talon Metals aims to use a novel new "carbon capture" technology to suck carbon dioxide out of the atmosphere and chemically bind it to an absorbent mineral called "zeolites" found inside its Tamarack Nickel-Copper-Cobalt Project in northern Minnesota. Once chemically bound, it stays locked in the material and is not released into the air. 

The technology was invented by California startup CarbonCapture, which was founded in 2019. CarbonCapture's investors include the investment firm of Marc Benioff, the billionaire CEO of Salesforce.

Tesla said in the past it plans to buy 75,000 tons (165 million pounds) of nickel concentrate over six years, including smaller amounts of cobalt and iron ore, at London Metals Exchange-listed prices. 

Last year, Tesla also signed nickel supply deals with mining company BHP Group in Australia and from the French territory of New Caledonia off the Australian coast, which in the early 1970s was the second largest nickel producer in the world.

In Feb 2021, Musk tweeted about the challenges of sourcing nickel for EV batteries and wrote that it's Tesla's "biggest concern for scaling lithium-ion cell production." 

resource from: Bloomberg News

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