Tesla's battery factory in California
US-based electric vehicle producer Tesla has entered into an agreement to buy nickel from the Tamarack mine, a joint venture project between Toronto-listed Talon Metals and diversified major Rio Tinto.
Tesla has committed to buy 75 000 t (165-million pounds) of nickel in concentrate from the Tamarack project and has a preferential right to negotiate to purchase additional concentrate over and above the initial commitment.
The purchase price would be linked to the London Metals Exchange official cash settlement price of nickel, Talon said in a statement on Monday.
“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 Talon CEO Henri van Rooyen.
The six-year agreement was conditional upon Talon earning a 60% interest in Tamarack, which would enter production in 2026 and was seen as a vital source for the US EV battery supply chain. Talon currently owns a 51% interest in the project and has the right to increase its interest by 9%.
Talon is focusing on progressing the Tamarack project towards completion of a prefeasibility study this year, exploration VP Brian Goldner said last month.
Tesla founder and CEO Elon Musk has repeatedly asked miners to sharpen their focus on producing more nickel, which is a key metal used to manufacture battery technology.
Tesla last year signed an agreement with diversified major BHP for nickel supplies from its Western Australian operations.
BHP expects demand for nickel in batteries to grow by more than 500% over the next decade. The major on Monday announced an investment in a Tanzania nickel project, weeks after its bid to acquire a Canadian nickel asset failed.