Tesla Inc (NASDAQ: TSLA) has signed a deal to secure the nickel stocks of BHP, the world’s largest miner, as it looks set to bolster stocks of a key ingredient used to build batteries for electric vehicles.
BHIP shares traded 3.13% higher in Australia after the deal was announced.
What happened: This is Tesla’s third such deal in a year. Under the agreement, BHP will supply Tesla with nickel from its Nickel West assets in Western Australia, which it claims is one of the battery metal’s lowest-carbon producers.
“Demand for nickel in batteries is estimated to grow by more than 500% over the next decade, largely to support rising global demand for electric vehicles,” said BHP Chief Commercial Officer Vandita Pant.
Tesla, like its rivals, is rushing to develop supply chains and secure raw materials for its electric vehicle batteries. The automaker already gets three quarters of its lithium and more than a third of its nickel feedstock from mineral-rich Australia.
A Reuters report in June indicated that Tesla expect to spend more than $1 billion annually over the next few years to source key battery materials from Australia due to its reliable mining industry and responsible manufacturing practices.
Musk said at the time that the automaker gets most of its lithium from Australia and also uses nickel instead of cobalt because it has better range and greater storage capacity.
Why it matters: Nickel is an important metal in the production of lithium-ion batteries used in electric vehicles, and the world’s largest electric vehicle manufacturer has recently expressed concerns about its availability.
Tesla had a last year five year deal with Australia’s Piedmont Lithium Limited (NASDAQ: PLL) for the supply of high purity lithium ore. In March, Tesla achieved a nickel delivery deal to purchase the mineral from the Goro mine in New Caledonia with Brazilian mining company Vale.
Musk has said it before plan to move away from nickel cathode batteries due to supply constraints, forcing the company to shift its standard range of EV models to iron cathode.
Price promotion: TSLA shares closed 0.79% lower at $655.29 on Wednesday. PLL shares closed 14% higher at $655.29 on Wednesday.
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Photo: Courtesy of Tesla
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