Brazilian mining giant Vale said on Friday it has signed a long-term deal to supply electric car giant Tesla with nickel from Canada.
Vale did not disclose the value of the deal or how long the contract would last. Deshnee Naidoo, head of the company's base metals division, said he was pleased to have Tesla as a customer.
Nickel, a key raw material for lithium-ion batteries, has risen almost 50 per cent this year to $30,000 a tonne, driven by strong demand from the car industry.
Tesla CEO Elon Musk has said nickel supply is one of tesla's biggest challenges in expanding its production capacity. He also complained about the skyrocketing price of lithium, even going so far as to say that Tesla might have to directly mine and refine the metal on a large scale.
In 2020, Musk urged mining companies to produce more nickel, promising tesla would offer huge contracts to eligible miners if they could extract nickel efficiently and environmentally. Since then, Tesla has been scouring the globe for reliable sources of supply.
In a recent report, Investment bank Goldman Sachs said it expected nickel demand from carmakers to rise from 176,000 tonnes in 2021 to 1.4 million tonnes in 2030.
While Vale is best known for its vast iron ore business, it also has a large industrial metals business covering nickel, copper, cobalt and other clean-energy metals.
Vale is at a critical point in its transition as it moves to divest non-core businesses, such as coal and bauxite, to focus on iron ore, nickel and copper. Vale produced 76,000 tonnes of nickel last year, according to the data.
