Elon Musk’s Mining Move
“Please Mine More Nickel,” Musk Insists As Tesla Increases Production.
Boss Tesla Inc Elon Musk urged mining companies to produce more nickel, a key ingredient in batteries required for the company’s electric vehicles, warning that the current cost of batteries remains a major obstacle to the company’s growth.
«Tesla will give you a giant long-term contract if you mine nickel efficiently and environmentally», – Musk said on Wednesday.
Nickel makes batteries dense, so cars can run farther on a single charge, and Tesla needs this metal more than ever as the company aims to increase production of trucks and solar projects that use a lot of nickel..
Musk’s call for increased nickel production comes at a time when prices for battery materials have plummeted.
Still, traders and analysts say the volumes Tesla will need are unlikely to be a convincing argument for mining companies to invest in increased production, and they are unlikely to raise prices in the medium term..
Tesla is currently receiving Nickel Cobalt Manganese (NCM) batteries from South Korea’s LG Chem Ltd and Nickel Cobalt Aluminum (NCA) batteries from Japan’s Panasonic Corporation..
These companies buy nickel indirectly from mining companies in a long supply chain. Tesla does not disclose which nickel miners are in its supply chain.
Given Tesla’s commitment to sustainability, the company is likely to opt for high-grade nickel sulfide, which requires less energy to process than laterite ore, said Lachlan shaw from National Australia Bank.
There are three key suppliers: Brazilian Vale Inc, which operates in Canada, Russian company «Norilsk Nickel» and BHP Group in Western Australia.
While EVs consume much less nickel than traditional industries like stainless steel makers, EVs are expected to be the fastest growing market for mining companies..
Research firm Wood Mackensie predicts nickel consumption in EV materials will grow by 64% between 2019 and 2025, although meeting that demand can be a daunting task for an industry that is slowly increasing capacity in a timely and cost-effective manner. development of the electric vehicle segment.
«He needs nickel, so he hopes nickel prices will fall and fall, a Chinese nickel trader told Reuters. – Prices will not be affected in the short term because the market is in surplus».
Nickel hit a 14-month low of $ 10,865 per tonne CMNI3 in March, but has since recovered to $ 13,180, still down about 30% from five-year highs in September. According to a trader, prices rose 2.6% partly against the backdrop of Tesla’s optimistic forecast.
Tesla announced second-quarter earnings on Wednesday, but Musk said he will prioritize profit growth and focus on making Tesla vehicles more affordable..
«The real constraint to Tesla’s growth is manufacturing at an affordable price. This is the real limit», – Musk said, adding that the company will expand its business with Panasonic, CATL and «possibly with others».
Tesla is expected to showcase technological advances at its event «Battery day» in September.