Tesla Signs Deal to Buy Nickel from U.S. Mining Company

Tesla has signed a deal with the U.S.-based Talon Metals Corp to buy 75,000 tons of nickel from Talon Metals Corp’s mine in Minnesota over the next six years. It will also buy cobalt and iron ore from Talon Metals Corp.

Over the past couple of years, Tesla has shown greater interest in sourcing raw materials from mining companies in countries with stronger environmental regulations. This includes deals to buy metals from companies in Canada and Australia.

As part of the deals that Tesla makes with mining companies, it pushes for increasingly environmentally friendly mining practices. The 2020 deal with a Canadian mining company called for “carbon-neutral” mining practices, for instance.

Nickel is a critical metal for Tesla’s EV batteries. Its longer-range vehicles use batteries with a nickel-cobalt-aluminum composite for the battery cells. It recently switched some of its batteries over to a lithium-iron-phosphate chemistry, likely as a way to save money on manufacturing costs.

Tesla CEO Elon Musk has urged mining companies to increase production of nickel amid the risk of supply chain shortages. During a Q2 2020 earnings call with investors, he expressed concern about possible raw material shortages, especially nickel. He said mining companies might try to limit supply to drive up the price and he was working on convincing them to focus on more efficient, environmentally friendly mining processes instead.

Following its usual practice of trying to control as much of the supply chain as possible, Tesla has also shown an interest in operating at least one mine near its Gigafactory in Nevada. In September 2020, it obtained the mineral rights to a lithium clay deposit in Nevada. At the time, Elon Musk said that there may be enough lithium in Nevada to electrify all of America.

The practice also reduces how far raw materials and parts have to travel before they are added to the final product. By making its own cathodes, for instance, Tesla significantly slashes the number of miles that a cathode has to travel to its factories. Tesla has also floated the idea of making its own semiconductor chips as a response to the global chip shortage.

Tesla’s control of its supply chain has earned two of Tesla’s car models top slots in Cars.com’s list of most American-made cars.

During the Battery Day event in 2020, Elon Musk did claim that Tesla recycles 100% of its batteries and might be able to eliminate the need to source some metals like cobalt. At Gigafactory Shanghai, the cells from returned batteries are refurbished and reused.

However, in April 2021, Germany fined Tesla for not meeting regulatory requirements for posting public notices about battery recycling. (It is possible that Germany caused a lot of Elon Musk’s Tesla-related headaches last year.)

There is a possibility that Elon Musk would secretly like to mine the trillion-dollar asteroid, 16 Psyche, once SpaceX’s Starship program really takes off. NASA estimates that 16 Psyche could be up to 30% metals and worth up to $10,000 quadrillion at today’s metals prices.

Mining that much metal could take the load off Earth (and, yes, crash metals prices lol). Until then, Elon Musk is stuck with making deals with mining companies like Talon Metals Corp and possibly having Tesla mine its own cobalt.