Tesla is listed as a “technical partner” in a deal to take over a very large controversial nickel mine in New Caledonia.
Lately, Tesla CEO Elon Musk has been pushing for nickel producers to boost production as he expects the resource could become a bottleneck for battery production.
It’s likely the reason why the automaker decided to get involved as one of the world’s biggest and most controversial nickel mines is changing hands.
New Caledonia is a small French colony in the southwest Pacific Ocean, and it is believed to own as much as 25% of the world’s nickel.
It is home to the Goro mine owned and operated by mining giant Vale.
They took over the mine in 2007 in a multibillion dollar buyout in hopes to ramp up production to 40,000 tonnes of nickel per year.
However, the project has been plagued with problems from conflicts with locals that led to sabotage to environmental spills due to the use of high-pressure acid leach (HPAL) technology.
The mine ended up losing money for Vale as production was unstable and its future was uncertain.
The company has been on the hunt for a buyer for over a year, but the sale is controversial in a nation that has been debating getting its independence from France and where nickel is one of their main sources of wealth.
After much negotiations and debate, on Thursday a deal was reached that will see Vale sell the mine to a consortium consisting of employees of the mine as well as three regional provinces and the Singaporean commodity trading group Trafigura that will own 19% of the mine.
Interestingly, Tesla is named as “technical and industrial partnership” in the deal, and the automaker is expected to help with product and sustainability standards at the mine.
As part of the deal, Tesla is also expected to buy nickel from the mine in order to secure supply for its battery cell production.
Tesla has recently indicated that it was planning to move into the mining business to secure resources for battery production.
The automaker has also secured lithium mining rights in Nevada.
However, Musk has shown more concerns about nickel, which is a big part of the cathode in lithium-ion battery cells.
The price of nickel increased more than 25% over the last year due to supply concerns as demand for battery production is increasing:
However, prices have crashed 12% over the last week alone as some producers have started to answer Musk’s call to increase production.
FTC: We use income earning auto affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.