In July, Telsa CEO Elon Musk said his company would give a “giant contract for a long period of time” to a company that could mine nickel efficiently and in an environmentally friendly way. In September, Reuters reported that the electric vehicle manufacturer is in discussions with Canadian miner Giga Metals developing a large mine that would give Tesla access to low carbon nickel for its batteries.

Telsa has stated that it is striving to reduce its own carbon footprint while Giga Metals’s low carbon nickel plans include turning waste from its mining operations into cement type rock using carbon dioxide in the atmosphere, and using hydropower.

Reuters, which cited three sources close to the discussion for the article, reported that Giga Metals’s President Martin Vydra declined to comment on any talks with Tesla, but said: “Giga is actively engaged, and has been for some time, with automakers regarding our ability to produce carbon neutral nickel.

“The cost of developing our project, excluding bringing hydroelectric power to the site, will be less than $1 billion.”

Nickel is a critical element for the batteries that power electric vehicles. The metal is expected to see a surge in demand over coming years as governments, companies and consumers seek to cut noxious fumes emitted by fossil-fuelled vehicles.

Forecasts from Benchmark Mineral Intelligence suggest nickel demand for batteries will rise to 1.4 Mt (1.5 million st) in 2030, or 30 percent of total nickel demand, from around 139 kt (152,000 st) and 6 percent respectively this year, as sales of electric vehicles soar.

The problem for Tesla and other automakers is that most of the world’s new nickel production will come from Indonesia, where the process would involve disposing mining waste into the ocean, a major concern for environmentalists.

Giga Metals’s Turnagain Mine in British Columbia has measured and indicated resources of 2.36 Mt (2.6 million st) of nickel and 141 kt (155,000 st) of cobalt, according to its website.

Canada produced 180 kt (198,000 st) of nickel last year.

Giga plans to produce 40 kt (44,000 st) of nickel and 2 kt (2,200 st) of cobalt a year for 20 years. That would be enough to power thousands of electric vehicles.

Tesla could provide financing, possibly in exchange for equity, nickel and cobalt. It could agree to buy the nickel and cobalt, which would attract financing from others, the source added.

Any deal would be for the life of the mine, which could be for up to 40 years, the sources told Reuters.

Tesla’s current capacity is 490,000 electric vehicles in the United States and 200,000 in Shanghai, according to its website, which with its expansion plans will require vast amounts of battery materials in the future from many sources.