Tesla Reportedly In Talks With Canadian Mining Firms for Nickel

According to recent reports, Tesla is in talks with a Canadian mining firm known as Giga Metals to provide low-carbon nickel for its electric vehicles. In a second-quarter earnings call with investors, Elon Musk indicated that Tesla has been seeking out mining companies that can produce large quantities of the metals that it needs for its cars in an environmentally friendly manner and is willing to sign a long-term sourcing contract in order to make it happen.

“Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally-sensitive way,” he said.

Giga Metals did not directly confirm that it is communicating with Tesla, but does seem to fill Musk’s requirements for environmentally friendly practices. Its current investment plans include a system that can create a cement-like material using mining waste, carbon dioxide, and hydroelectric power and is projected to come with a price tag of less than $1 billion in total costs. Giga Metals President Martin Vydra did hint that a contract with Tesla may be a possibility, however:

“Giga is actively engaged, and has been for some time, with automakers regarding our ability to produce carbon neutral nickel.”

Giga Metals also has plans in the works for a North American mine that will be capable of producing 40,000 tonnes of nickel and 2,000 tonnes of cobalt over the next 20 years, which will be enough for the creation of thousands of Tesla’s electric cars. Not that it doesn’t have competition: Canada Nickel Co. has also reached out to Tesla with an offer to supply nickel using zero-carbon techniques that Musk says “sounds great.”

Plans like this might help to quell the criticism of environmentalists and cultural preservation activists who might be enthusiastic about attempts to move away from fossil fuel-powered vehicles, but have expressed concern about the mining practices used to produce the materials needed for them. Most recently, the CEO of Rio Tinto resigned after a public outcry related to the destruction of sites of cultural significance to Australian Aboriginals. An MIT report on the environmental impact of mining indicates that illegal mining operations in China produces as much as 20,000 tons of rare-Earth elements every year and these operations are unlikely to follow commonly accepted environmental best practices.

Tesla’s push for metals sourced in North America, in which mining may be more tightly regulated, can be seen as a positive move to address these concerns by taking greater control over its supply chain. Musk has indicated that he does not want to wait while mining companies hold out for a more attractive price point in order to put his plans for carbon-neutral metals sourcing into practice:

“I’d just like to re-emphasize, any mining companies out there, please mine more nickel. … Wherever you are in the world, please mine more nickel and don’t wait for nickel to go back to some high point that you experienced some five years ago.”