Tesla will be purchasing most of the battery-ready graphite that would be produced at a planned facility in Louisiana. The move is seen as part of the company’s efforts to acquire key materials for its vehicles from sources beyond China.
As noted in a Bloomberg report, Melbourne-based Syrah Resources Ltd would be supplying Tesla with graphite anode material for an initial period of four years. Syrah noted that Tesla would have the option to purchase additional volumes of graphite subject to the further expansion of its Vidalia plant.
Syrah’s Vidalia plant is expected to process graphite from Mozambique, effectively making it the first US-based source of graphite anodes. This should make the facility an important partner for companies such as Tesla, which have staked their future on the rapid growth of the electric vehicle sector and the battery industry.
So far, China produces nearly all the graphite that’s used in the production of anodes. And considering that BloombergNEF forecasts that the demand for graphite anodes would likely increase fivefold by the end of the decade, initiatives such as Syrah’s Vidalia plant, which could produce the material in the United States, could truly make a difference.
The value of graphite was recently highlighted earlier this month when Tesla asked the US government to waive tariffs on the material that was coming from China. Tesla noted then that it could not acquire the necessary volumes of graphite anywhere else. It should be noted, however, that the initial 10,000 ton-a-year production rate of Syrah’s Vidalia plant would only be able to supply about 3% of the expected US-based battery demand by 2025.
“As a result of Tesla’s due diligence process for suppliers of artificial graphite, globally and in the United States, Tesla has concluded that no company in the United States is currently capable of producing artificial graphite to the required specifications and capacity needed for Tesla’s production,” Tesla noted.