Tesla is to buy nickel from a mine on the Pacific island of New Caledonia in a move to secure its supply of the metal needed for the lithium-ion batteries used in electric vehicles.
Under the agreement, Tesla will not have an equity stake in the mine but will get greater control over a vital element in its electric battery supply chain.
The electric-car maker will become a technical adviser at the Goro mine and also get long-term supplies of nickel from the project as part of an agreement with the New Caledonian government, according to reports in FT.com and the BBC. New Caledonia is a French-owned Territory.
The move comes amid growing concerns about future supplies of nickel, with rising prices over the past year and growing investment in nickel mines by Chinese companies. Tesla chief executive Elon Musk recently said on Twitter, “Nickel is our biggest concern for scaling lithium-ion cell production.”
New Caledonia is the world’s fourth-largest nickel producer, but in December protests by independence groups delayed the sale of the lossmaking Goro mine by Brazilian mining company Vale.
And in China, Tesla rival Nio recently reported an industry-wide shortage of electric vehicle batteries and semiconductor chips would hamper production for the first half of 2021.