Tesla And VALE Secretly Sign Nickel Supply Agreement

Tesla and Vale Secretly Sign Nickel Supply Deal

The escalation of the Russian-Ukrainian conflict since the beginning of the year has heightened concerns about nickel supply for electric car makers. But Tesla has reportedly been searching for nickel supplies globally since 2021 and has signed agreements with several nickel suppliers, one of which is the world's iron ore producing and exporting giant, Brazil's VALE.

Tesla has signed a multi-year supply agreement with VALE for these nickel supplies from Canada, the report said. Vale has previously said that 5% of its total production is currently already sold to the electric vehicle market, with plans to increase this to 30% to 40% in the future.

In addition to VALE, Tesla also committed in January to buy 75,000 tons of nickel from metals company Talon Metals Corp.'s Tamarack mine project. In July last year, Tesla signed a nickel supply agreement with BHP Group, the world's largest mining company. In March last year, Tesla also reached an agreement with a nickel mine operator in South Pacific New Caledonia.

Musk has repeatedly said that the company's biggest concern is the supply of nickel. That's because the metal is a key component of batteries for long-range vehicles, while short-range vehicles use lithium iron phosphate batteries.

According to the European Commission's Joint Research Centre report, the battery industry's demand for nickel is expected to reach 2.6 million tons in 2040, compared with just 92,000 tons in 2020.

Previous analysis has pointed out that the global nickel supply may be short as early as 2023. And as demand for electric vehicles continues to heat up, this shortage is feared to come faster.