Tesla Strikes Deal To Secure Nickel Supplies From Tamarack In Minnesota

Tesla Inc TSLA has agreed to buy nickel supplies from Talon Metals Corp’s TLOFF Tamarack mines in central Minnesota, a first such U.S.-based nickel supply deal for the Elon Musk-led company.

What Happened: Tesla will secure 75,000 metric tons of nickel concentrates from Talon over six years as per the agreement, with an option to secure an additional supply over and above the initial 75,000 metric tonne commitment on preferred negotiation basis.

The purchase price to be paid by Tesla for the nickel in concentrate will be linked to the London Metals Exchange (LME) official cash settlement price for nickel, Talon said. 

See Also: Tesla Strikes Deal With Australia's BHP To Secure Nickel Supply: What You Need To Know

Besides nickel, Tesla will also secure by-products of the mining extract such as iron and cobalt.

Tamarack is a nickel, copper and cobalt joint venture between Talon and Rio Tinto Group. The 11-mile long site is located in Minnesota and is yet to commence commercial production. 

Talon currently owns a 51% interest in the Tamarack Nickel Project and has the right to increase its interest to 60%.

Why It Matters: Tesla and its legacy rivals such as General Motors Co GM and Ford Motor Co F are rushing to develop supply chains and secure raw materials for their electric vehicle battery needs.

Demand for both lithium and nickel, which are used in battery-making, is expected to further soar as global economies and companies switch to electric vehicles. 

Musk has in the past expressed concern over nickel’s availability — a key metal used in the production of lithium-ion batteries.

See Also: Lithium Prices Point To Rising EV Prices In 2022

Last year, Tesla signed a deal to secure nickel supplies from BHP Group Ltd BHP from the mining giant’s Nickel West asset in Western Australia. BHP had then said demand for nickel in batteries is estimated to grow by over 500% over the next decade on the back of rising demand for electric vehicles.
Price Action: Talon shares closed 3% lower at $0.47 a share on Monday.