Vale made secret deal to supply nickel to Tesla, says Bloomberg
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Mining company is one of the world's largest producers of the metal, which is used in electric car batteries and whose price soared with the Russian war.
Elon Musk has as one of his main concerns ensuring a steady supply of nickel for Tesla's electric car batteries (Reuters/Aly Song/File Photo)
Russia's invasion of Ukraine has raised concerns among electric vehicle manufacturers about the supply of nickel, which is a critical ingredient in electric vehicle batteries. Russia is one of the world's largest producers of the metal. But Tesla was already scouring the planet for nickel, striking deals with several suppliers since 2021, including Vale (VALE3) . That unannounced multi-year deal involves nickel from Canada, according to people familiar with the matter who requested anonymity to discuss private matters. Unlike most automakers, Tesla has worked for years to secure its own nickel supply. The efforts are part of the focus of CEO and founder Elon Musk in vertical integration to maintain control over the supply chain. The company operates a massive battery cell factory in the US state of Nevada in conjunction with Japan's Panasonic.
Tesla buys cells from other major suppliers, but it also manufactures its own. The company seeks constant advances in raw material processing and battery manufacturing. During a presentation in 2020, its executives talked about shortening the path between the mine and the cathode. “What Tesla did with nickel is a hidden competitive advantage,” said Gene Munster, managing partner at Loup Ventures. “Tesla remains a few steps ahead of the rest of the electric car industry.”
Musk repeatedly cites nickel supply as a major concern in the company's expansion of production and nickel availability as a cause of industry-wide anxiety. Nickel demand for battery manufacturing is expected to jump from 400,745 tonnes this year to 1.5 million tonnes in 2030, according to BloombergNEF, Bloomberg's division for research and analysis in the commodity and energy markets.
“Please extract more nickel from the mines,” Musk urged miners on a conference call two years ago. “Tesla will give a giant long-term contract to anyone who mines nickel efficiently and in an environmentally sound manner.”
Sanctions against Russia for the invasion of Ukraine added to this urgency. The country holds 17% of global class 1 refined nickel capacity, the type needed for electric vehicles. Since the attack on Ukraine began on February 24, the price of nickel has risen 30% on the London metal exchange. Vale's shares, meanwhile, have risen 23% this year and 11% since the start of the war. Prices tripled in just two days as speculators were forced to reverse short positions, but have since retreated. The market may stabilize in the face of signs that the war will end.
“Rising nickel prices and the implications of Russia’s invasion of Ukraine should put pressure on battery manufacturers, particularly in the United States, to secure alternative supply chains,” according to a BloombergNEF study.
Vale: Higher sales for electric cars
Tesla's deal with Vale is one of many such pacts the automaker has lined up over the past year. In January, the Austin, Texas-based company committed to purchase 75,000 tonnes of nickel concentrate from a Talon Metals project being developed in the US state of Minnesota. Tesla had already made a deal with the BHP Group, the world's largest mining company, to source material from Australia. The automaker also has an agreement with operators of a nickel mine in New Caledonia, an island in the South Pacific. "People don't realize how far ahead Tesla is when it comes to securing raw material supply in the supply chain and an approach to battery raw materials," said Todd Malan, spokesperson for Talon Metals. .
Vale has plans to increase sales to the electric vehicle market from 5% currently to 30% to 40%. The Brazilian miner did not specifically comment on the deal with Tesla, which did not respond to requests for comment. Nickel is an indispensable component for vehicle battery cathodes. Tesla is focused on nickel chemicals for long-range vehicles and uses iron phosphate for shorter-range vehicles.
Meanwhile, the White House aims to establish a thriving battery supply chain in the United States. President Joe Biden 's administration has been spending billions of dollars to support sustainable domestic projects that provide essential raw materials like lithium, cobalt, nickel and graphite.
The Senate Energy and Natural Resources Committee will hold a hearing on the domestic supply of critical minerals this Thursday, the 31st.
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font redaction fonte redação https://exame.com/invest/mercados/vale-fez-acordo-secreto-para-fornecer-niquel-a-tesla-diz-bloomberg/
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