Tesla Signed Deal for the First US Nickel Supply for Battery Production

But can nickel really be carbon neutral?
Derya Ozdemir
A heap of nickelRHJ/iStock

Electric vehicles (EVs) are touted as environmentally friendly as they may eventually alleviate our tailpipe-emission problem. However, as the EV hype gains momentum, it sometimes fails to address the damage done to the environment while making them. Producing batteries can be a quite dirty business, after all.

Electric car company Tesla, which has been criticized by some for being less eco-friendly than it purports to be, claims to prioritize ethical sourcing of battery components, and it appears to be moving in that direction, as it has signed its first U.S. nickel supply deal, selecting Talon Metals Corp's Tamarack mining project in Minnesota.

The move is a part of Tesla's plans to get the electric vehicle battery metal in a way it considers more environmentally friendly, and the deal, announced on January 10, comes as demand for nickel is expected to rise over the next decade as EVs become more popular. Nickel is a significant component of an EV battery since it increases energy storage in a battery's cathode, hence extending the car's range.

And Talon claims to be working on a method to suck carbon dioxide from the atmosphere and chemically bind it to rocks discovered within its Tamarack project. This would allow it to permanently store the carbon dioxide, and if successful, Talon would be able to promote their nickel as carbon neutral.

“This agreement is the start of an innovative partnership between Tesla and Talon for the responsible production of battery materials directly from the mine to the battery cathode," said Henri van Rooyen, CEO of Talon. "Talon is committed to meeting the highest standards of responsible production that is fully traceable and that has the lowest embedded CO2 footprint in the industry. Talon is excited to support Tesla’s mission to accelerate the transition to renewable energy."

Tesla intends to purchase 165 million lbs (75,000 metric tonnes) of nickel concentrate, as well as smaller volumes of cobalt and iron ore, at London Metals Exchange-listed pricing over the next six years. As of today, it's not clear where Tesla will refine the nickel concentrate as the U.S. doesn't have a nickel refinery.

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Back in 2020, Tesla also signed a lithium supply deal with Piedmont Lithium for its Texas battery factory; however, the agreement was halted last year due to growing opposition to Piedmont's proposed mine in North Carolina.

Currently, Indonesia is the world's largest nickel producer as it holds the world's largest nickel reserves. However, miners there generally utilize energy-intensive technologies to extract it and use controversial waste disposal practices such as dumping waste rock into waterways. If Talon manages to live up to its claim and make its nickel carbon neutral, this would be a big selling point for Tesla, and the rest of the world.