Tesla On Track to Buy $1 Billion in Metals From Australian Mining Firms This Year

According to company statements, Tesla plans to buy $1 billion in raw materials from Australian mining companies for its battery manufacturing operations in 2021. It cited the more reliable and environmentally responsible mining practices in Australia.

“Australian mining companies do have a good reputation, great expertise, professionalism and are preferred by manufacturers increasingly concerned about meeting both today’s and the future’s [environmental, social and governance (ESG)] requirements,” said Tesla chairman Robyn Denholm.

Australia has rich deposits of lithium and nickel that may be attractive to automakers like Tesla that are interested in producing purely electric vehicles and face increasing pressure from environmentalists to clean up their supply chains. Tesla has especially been focused on “green” operations in its supply chain, including talking to Canadian mining firms that use “zero-waste” practices when mining nickel and floating the idea of mining its own lithium in Nevada, where it has a battery-making facility near Reno.

Even that may not be enough for some environmentalists. An extreme environmentalist group claimed responsibility for an act of suspected arson that damaged power lines leading to Gigafactory Berlin, although the factory itself was fortunately not damaged. A letter from the environmentalist group that was found online claimed that “Tesla is neither green, ecological nor social.” Law enforcement authorities are already investigating the suspected arson.

Australia, Canada, and the United States do have stricter environmental regulations that impact mining than much of the world does. Illegal mining is also a concern in some parts of the world. It’s still a major problem in China despite repeated efforts to clamp down on both illegal mining and smuggling of raw materials, for instance. (This time, though, it’s not about Bitcoin, which involves a different kind of mining.)

Efforts included Beijing’s introduction of a “tracing system” that supposedly could track invoices for rare-Earth elements and export data in 2016. At the time, authorities estimated that smugglers were moving up to 40,000 tonnes of rare-Earth elements through networks that took them through Hong Kong and Vietnam. It would naturally stand to reason that the smugglers and their backers in the mining industry would ignore Beijing’s environmental regulations while producing these rare-Earth elements in order to maximize their profits as easily as they ignore China’s laws on exports.

The Biden Administration has especially been pushing automakers to move the sourcing of raw materials over to the United States’ more reliable allies such as Australia. Canada and Brazil may also benefit from these policies.

Tesla has also ramped up its efforts to sell its Powerwall and Powerpack batteries in Australia to help with improving reliability in the country’s energy grid. This has already proven useful for events like the recent explosion at the Callide Power Station, a coal-fired power plant in central Queensland, Australia. A massive Powerpack farm called the Hornsdale Power Reserve stepped up to assist with providing power to the more than 470,000 customers that were affected by the explosion and its cascading effects throughout Queensland.