- Tesla will become an adviser of a nickel mine in New Caledonia, according to a deal seen by Reuters.
- The agreement will allow Tesla to buy nickel for its battery production amid concerns of shortages.
- Elon Musk tweeted previously: “Nickel is our biggest concern for scaling lithium-ion cell production.”
- Visit the Business section of Insider for more stories.
Tesla on Thursday agreed to partner with a nickel mine in New Caledonia in an effort to secure more of the resource, which is key in the production of lithium-ion batteries in electric cars.
Tesla will become an industrial adviser at the Pacific island’s Goro mine, which is owned by Brazilian mining giant Vale and is a French overseas territory.
The electric car maker will help with product and sustainability standards and buying nickel for its battery production, according to an agreement with the New Caledonian government, per Reuters.
The move comes amid growing concerns about the demand for nickel as the acceleration of electric vehicle production could lead to low supplies.
“Nickel is our biggest concern for scaling lithium-ion cell production,” Tesla CEO, Elon Musk, tweeted February 25.
This echoed his tweet from July: “Nickel is the biggest challenge for high-volume, long-range batteries.” Musk added that nickel production in Australia, Canada and Indonesia is going well but in the US it’s “objectively very lame.”
There has been large unrest in the region since Vale and the French state decided to sell the nickel mine to Swiss commodity trader Trafigura in early December. This triggered strikes and protests from pro-independence groups, which forced Vale to shut down the site in the same month.
According to the agreement cited by Reuters, the new deal means a 51% stake in the Vale operations will be held by New Caledonia’s provincial authorities and other local interests. Trafigura will hold a 19% stake — less than 25% planned in the original sale agreement with Vale, the outlet reported.
Tesla won’t have a stake, just a partnership that will secure its electric battery supply chain as it ramps up production. “Our task now is to complete any and all outstanding items to allow the transaction to formally conclude,” Vale said in an emailed statement to Reuters.
New Caledonia is the world’s fourth-largest nickel producer. The material is also mined mostly in Russia, Canada, and Indonesia.