A key, but volatile, link in the lithium-ion battery chain has seen electric vehicle OEM Tesla sign two supply deals in just a few weeks.
The US firm is more than an electric vehicle and energy storage manufacturer, In 2018, battery production at its Nevada, US Gigafactory 1 reached an annualised rate of around 20GWh— with the firm producing more batteries in terms of kWh than all other carmakers.
In the first deal, Tesla committed to purchase 75,000 metric tonnes (165 million lbs) of nickel concentrate from Talon Metals Corp, through its US subsidiary Talon Nickel.
Under the terms set out in the agreement, Tesla also has a preferential right to negotiate the purchase of additional nickel concentrate over and above the initial 75,000 metric tonne commitment.
Henri van Rooyen, CEO of Talon, said the agreement was the start of a partnership for the responsible production of battery materials directly from the mine to the battery cathode.
The agreement will initially last six years or until the total commitment has been produced and delivered to Tesla.
The agreement is conditional upon Talon earning a 60% interest in the Tamarack Nickel Project; commencing commercial production at the Tamarack Nickel Project; and the parties completing negotiations and executing detailed supply terms and conditions.
The agreement to purchase nickel concentrate from the Tamarack Nickel Project in Minnesota, US follows an extensive due diligence period performed by Tesla and lengthy negotiations between the parties.
Talon aims to begin commercial production on or before January 1, 2026 at the Tamarack Nickel Project, which may be extended by the agreement of the parties for up to 12 months.
The purchase price of the nickel in concentrate will be linked to the London Metals Exchange official cash settlement price.
Additional materials deal
As the sun set on 2021, Tesla also inked a binding active anode material offtake agreement with Australian firm Syrah Resources.
Syrah will supply natural graphite active anode material (AAM) from its vertically integrated production facility in Vidalia, US.
The raw material will come from Syrah’s Balaama mine in the Cabo Delgado region of Mozambique, which has a two million ton a year plant capacity producing up to 350,000 tons annually of graphite concentrate.
Incidentally the area has seen an escalation of violence in recent years caused by Islamist Jihadists.
The offtake obligation is conditional on the parties agreeing the final specifications of AAM by no later than 31 December, and achieving final qualification of AAM to Tesla’s satisfaction by no later than 31 May 2025.
The deal may also be terminated if production has not started by 31 May 2024.
Subject to satisfaction of the above conditions, Tesla will offtake 8,000 tonnes per annum of the proposed initial expansion of AAM production capacity at Vidalia, which has initial planned production capacity of 10,000 per annum.
The deal provides Syrah a foundation to proceed with the initial expansion of Vidalia’s production capacity, as announced last December.
The terms of the agreement including volume, pricing and term will assist Syrah in finalising its investment decision in relation to Vidalia.
Syrah plans to make a final investment decision for construction of the facility this month.