Tesla to become a technical partner in the Goro nickel mine in New Caledonia

March 10, 2021

Electric vehicle maker Tesla will become a technical partner in the Goro nickel mine in New Caledonia.

Elon Musk, chief executive officer of Tesla, said on Twitter, “Nickel is our biggest concern for scaling lithium-ion cell production.”

Nickel is needed for the production of lithium-ion batteries for electric vehicles. Tesla will look to secure a long-term supply from the mine in New Caledonia which is the fourth largest producer of nickel in the world.

The BBC reported that the move comes amid growing concerns about future supplies of nickel, which has seen a 26 percent rally in prices in the past year.

New Caledonia’s huge nickel reserves are crucial for the local economy, and the Goro Mine, in the south of the island, has the potential to be one of the world’s biggest nickel producers.

In December, its owners Brazilian mining giant Vale and the French state, tried to sell it to Swiss commodities trader Trafigura.

The BBC reported that residents were so angry about the loss of local ownership and control that it sparked the collapse of New Caledonia’s government and led to workers going on strike.

A new agreement by pro-independence groups, loyalist parties and indigenous Kanaks will see the mine sold to a consortium that now includes employees as well as three regional provinces. Trafigura will hold just 19 percent.

Tesla will be involved in a “technical and industrial partnership” to help with product and sustainability standards along with taking nickel for its battery production, according to the agreement.

It will play the role of technical consultant in the design and improvement of the manufacturing process.

Vale said the deal would “enable the operations to continue with a sustainable path for the future, preserving jobs and delivering economic value to the country.”

While Tesla will not have an equity stake, its partnership in the mine gives it greater control over its electric battery supply chain as it ramps up production.

Nickel is mined mostly in Russia, Canada, New Caledonia and Indonesia and primarily used to make stainless steel. But the growth in electric vehicles has added a new source of demand for the metal.

The extraction of nickel, particularly the use of coal-fired power, comes at an environmental and health cost and mines have been criticized repeatedly by campaigners.

The agreement called for reinforced environmental standards and set a target for the mining complex to be carbon neutral by 2040.

 

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