Tesla Signs Deal To Source More Nickel – Report

Deal to source essential ingredient for electric vehicle batteries secured by Tesla, amid supply chain issues during pandemic and Ukraine war

Tesla has reportedly secured another source of nickel, as demand for electric vehicles (EVs) continues to grow.

Bloomberg reported that Tesla signed an undisclosed deal with Brazilian mining company Vale S.A. to supply it with nickel, which is a key ingredient in the batteries used by EVs.

The deal comes after Tesla CEO Elon Musk in July 2020 (just as the Covid-19 pandemic really began to bite across the world), urged the mining community to produce more nickel.

Nickel deal

Musk made the plea for more nickel, reportedly saying at the time “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”

Nickel makes batteries energy dense so EVs can run further on a single charge.

Tesla used to source nickel-cobalt-manganese (NCM) batteries from South Korea’s LG Chem and nickel-cobalt-aluminium (NCA) batteries from Japan’s Panasonic.

These firms in turn purchased nickel indirectly from mining companies.

There are thought to be three key suppliers – Brazil’s Vale, which operates in Canada using some hydropower, Russia’s Norilsk Nickel, and BHP Group’s operations in Western Australia.

The price of nickel had been rising steadily even before the conflict in Ukraine drove it up even further.

Now Bloomberg reported that Tesla has signed the multi-year supply deal with Vale for nickel from Canada.

Vale reportedly declined to comment on the report, but said it had stated previously that the company currently sells 5 percent of its production into the EV market, and plans to increase that to 30 to 40 percent.

Ukraine conflict

Russia’s unprovoked invasion of Ukraine has triggered a number of problems on the world stage, including adding to shortages and price increases of certain items.

Amid the invasion, Ukraine halted neon production in early March, raising fears that the move could contribute to the global squeeze on semiconductor production.

Ukraine supplies more than 90 percent of US semiconductor-grade neon, which is critical for the lasers used in chipmaking.

The gas, a biproduct of steel manufacturing in Russia, was purified in Ukraine before being exported.

Ukraine’s two leading suppliers of neon halted production earlier this month.

Ingas and Cryoin are said to be responsible for between 45 to 54 percent of the world’s semiconductor grade neon.

Ingas was based in Mariupol, whereas Cryo is located in Odessa.