Earlier in July this year, Tesla’s Elon Musk asked miners to mine more nickel. He pledged a “giant contract” for any firm that could mine nickel in an environmentally and economically sensitive way. Many speculate this to be an indication of Tesla upscaling its production of lithium-ion batteries. Forecasts show that Tesla may reach production of 5 million electric vehicles (EVs) by 2025.
So assuming each Tesla EV requires roughly 55 kilograms of nickel, and Tesla manufactures 5 million electric vehicles annually, the company would potentially need approximately 275 million kilograms (275,000 tons) of nickel annually. No wonder the company wants to award a giant contract to whoever can mine more nickel.
Additionally, nickel battery demand is predicted to increase by 14 times in the next decade, which will prompt a growth in demand of other battery metals such as cobalt, copper, graphite, lead and lithium.
Thus far, Tesla has depended on Panasonic for the production of battery cells. Panasonic sources its materials from the Sumitomo Metal Mining Corporation, which gets a majority of its nickel from the Philippines. Both Indonesia and the Philippines have nickel laterite ore. This ore is extracted using acid processes, which result in acid waste.
Because Tesla needs nickel that’s been mined sustainably, its future supplier of nickel sulphate needs to be able to produce huge amounts of the minerals, as explained above. Ideally, this would be sourced from a nickel sulphide mine in order to make it more environmentally and economically friendly.
Here are some nickel sulphide miners that could generate an environmentally sensitive and economic supply of nickel at scale.
Norilsk is the largest nickel producer globally and also the lowest cost producer in the world, which matches the economics and scale that Tesla needs. The company recently had an environmental issue when a storage tank collapsed leading to a diesel spill in the Artic.
The second-largest producer of nickel worldwide, Vale SA holds large sulphide mines in Canada, namely Voisey’s Bay, Thompson Mine and Sudbury. Its operations are environmentally friendly, economical and up to scale. However, the company has a major environmental problem in Brazil because of a dam collapse.
BHP Group Ltd
The company has an indicated and measured resource of 4.1 megatons with total nickel resource of 6.3 megatons. BHP is planning to expand nickel sulphate production in order to meet future battery demand.
This firm has large nickel sulphide mines in Canada, including its Sudbury and Raglan mines. The company also has nickel mines in New Caledonia and Australia, with both laterite and sulphide ores. Glencore may be an easy choice for Tesla considering the two companies already have a cobalt supply deal.
The firm is a relatively new nickel miner. It owns the Nova nickel-copper-cobalt sulphide mine that was discovered in 2012.
Because Tesla requires battery-grade nickel in large volumes, the above companies are the realistic choices for battery-grade nickel production on a large scale. Not only are they existing producers that occupy a majority of the market share, but they also can meet the expected rapid growth of demand each year.
A mining company you should watch is GoldHaven Resources Corp. (CSE: GOH) (OTCQB: ATUMF). This Canadian-based company focuses on acquiring and exploring properties with mineral resources, and Goldhaven recently acquired seven properties in Chile’s Maricunga Gold Belt.
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