Vale (NYSE: VALE), the world’s top nickel and iron ore producer, has inked a long-term deal with Tesla (NASDAQ: TSLA) that will see the Brazilian miner supplying the electric vehicles (EVs) icon with nickel mined in Canada
CEO Elon Musk promised in 2020 “giant contracts” to companies able to produce nickel in an “environmentally sensitive way” amid concerns of an imminent deficit
Since Musk’s pledge to miners, his company has inked nickel supply deals with the world’s largest miner, BHP, (ASX: BHP) in Australia, with Prony Resources in New Caledonia and with Talon Metals (TSX: TLO) for its Tamarack nickel project in Minnesota, US
Nickel helps cram more energy into cheaper and smaller battery packs, allowing EVs to charge faster and travel farther between plug-ins
Prices for the commodity have – not surprisingly – shot to historic records over the last year. In march, they surged by an unprecedented 250% in a day, forcing the London Metal Exchange (LME) to halt trading of the metal
Musk has repeatedly flagged nickel supply as the company’s biggest concern, as the metal is a key component in batteries for longer-range vehicles. Tesla uses iron-phosphate for shorter-range vehicles
Sanctions against Russia over the invasion of Ukraine have added urgency to secure supplies of the metal, since the country holds about 17% of global capacity for refined Class 1 nickel, the type required for EVs