Tesla is reportedly in talks with Brazilian mining company Vale SA over a potential deal for nickel supply. The latter will be supplying the EV automaker with nickel from its Canadian operations. Tesla has yet to comment about a potential partnership with the mining firm.
Tesla is looking to scale up its battery production. To do so, Tesla must ramp up its supply of raw materials, mainly lithium and nickel, at an accelerated rate. The company is looking for suppliers across the world.
Analyzing Vale SA’s Mining Activities in Canada
The Brazilian company’s Canadian operations span across three provinces: Manitoba, Newfoundland and Labrador, and Ontario. Vale SA is in the midst of expanding its mining site located in Voisey’s Bay Mine.
The site will incorporate an underground operation that will produce approximately 40,000 tonnes of nickel-in-concentrate per year. Vale also stated on its website that it is currently producing 65,000 metric tonnes of nickel in Canada alone.
Potential Deal with Vale SA: What it Means for Tesla
Tesla is adopting a two-pronged approach in its efforts to secure an increased supply of lithium and nickel. In other words, the company is looking for international suppliers, both private and public entities.
For instance, the automaker has already secured a deal with Piedmont Lithium Limited. The Australian mining company will supply approximately 264,800 tons of lithium over the next five years.
Tesla is also reportedly in talks with the Indonesian government (link to upcoming article written last night) over a potential investment in nickel supply.
Vale SA seems to be a good fit for Tesla’s supply chain, from both a commercial and an environmental standpoint.
Last July, Tesla CEO Elon Musk appealed to miners to produce more nickel. Musk stated that nickel miners can expect a “giant contract for a long period of time”. Musk also emphasized that a contract is guaranteed provided that nickel is mined “efficiently and in an environmentally-sensitive way”.
According to Mark Travers, Vale SA is adopting a strong environmental stance. The company has dedicated approximately $2 billion to the development of low-carbon projects. Travers also stated that those projects include electrification of underground vehicles, fuel switching and heat recovery.
All in all, a potential deal between both companies make perfect sense on all fronts.