The United States electric car maker will now play the role of a technical partner in a nickel mine – a mineral that is an essential requirement for making of lithium-ion batteries which power electric vehicles.
With the aim of securing long term supply of the metal usually in short supply, Elon Musk’s car company will also purchase the mineral from the Goro mine located on the tiny Pacific island of New Caledonia.
This move by Tesla is being viewed as a strategic one as there are predictions of potential shortage of nickel kin the future.
New Caledonia is the fourth largest nickel producer of the world. New Caledonia is a French overseas territory even though there have been growing demand for its independence.
“Nickel is our biggest concern for scaling lithium-ion cell production,” Musk said on Twitter last month.
For the local economy, the huge nickel reserve of New Caledonia is very crucial. The Goro mine which is located in the south of the island us believed to have the reserves of the metal which could make it one of the largest nickel producer of the world.
There were attempts in December last year to sell off the mine to Swiss commodities trader Trafigura by the current owners of the mine – Brazilian mining giant Vale and the French state.
However that decision of loss of local ownership of the mine had sparked widespread anger among the locals which resulted in the fall of the government in New Caledonia and forcing the workers to go on strike.
Following the debacle, it has now been decided that the mine would be sold to a consortium that now includes employees as well as three regional provinces and a new agreement for this was ironed out on Thursday between pro-independence groups, loyalist parties and indigenous Kanaks. Trafigura will hold just 19 per cent.
According to the agreement with Tesla, the electric car maker will be involved in a “technical and industrial partnership” which will help in boosting product and sustainability standards as well as with taking nickel for its battery production.
The car maker will play the role of technical consultant in the design and improvement of the manufacturing process.
The deal would “enable the operations to continue with a sustainable path for the future, preserving jobs and delivering economic value to the country”, Vale said.
Even though Tesla will not have any equity stake in the mine, this new partnership in the mine will give the company greater control over the supply chain of its batteries for electric cars as it enhances its production capacity to meet increased demands.
Found mostly in Russia, Canada, New Caledonia and Indonesia, nickel is primarily used to make stainless steel. But a new source of demand for the metal has been created by the emergence and growth in electric vehicles industry.
(Adapted from BBC.com)