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The head of Tesla Inc, Elon Musk, urged miners to produce more nickel, a key ingredient for batteries that power electric vehicles of the company, warning that its current cost continues to be a major obstacle to the growth of the company.
“Tesla It will give them a gigantic contract for a long period of time if they mine nickel more efficiently and in an environmentally sensitive way, ”Musk said in a conference call after the company released its financial results on Wednesday.
Nickel makes energy batteries dense so vehicles can travel a greater distance on a single charge, and Tesla needs the metal more than ever as it seeks to increase truck production and solar projects that use a lot of that mineral.
The application of Musk of greater nickel extraction occurs despite the fact that the prices of materials for batteries are close to minimums.
Traders and analysts, however, say the volumes Tesla would need are unlikely to be a compelling business case for miners to invest in higher output, nor are they likely to boost prices in the medium term.
Tesla currently buys nickel-cobalt-manganese (NCM) batteries from South Korea’s LG Chem Ltd and nickel-cobalt-aluminum (NCA) batteries from Japan’s Panasonic Corp.
Those companies buy nickel indirectly from mining companies that are part of a long supply chain in the automotive sector. Tesla does not reveal which nickel miners are involved in its supply chain.
Given Tesla’s focus on sustainability, the company is likely to prefer buying from high-grade nickel sulfide miners, which require less processing power than laterite ore, said Lachlan Shaw of the National Bank of Australia.
There are three major suppliers: Vale of Brazil, which operates in Canada using hydroelectric power, Norilsk Nickel of Russia, and BHP Group’s operations in Western Australia. “Vale has the advantage,” he said.
While the electric vehicles Consuming much less nickel than traditional industries such as stainless steel manufacturers, the market expects that sector to be the fastest growing for nickel miners.
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