Tesla owner Elon Musk recently expressed interest in getting into mining, particularly lithium extraction, in order to maintain the flow of the mineral needed to make electric car batteries. According to the businessman, the price of the mineral is out of control and, therefore, the company would have to enter the mining and refining of this metal. He added that lithium is found in almost all parts of the planet, so the problem lies in the pace of extraction and refining of the mineral, which is very slow. Other minerals used in the manufacture of batteries are nickel, cobalt and copper.
The entrepreneur's concern involves one of the essential minerals for the manufacture of electric cars. The same happens with nickel, copper and cobalt, which are also fundamental minerals in the production of electric cars. Elon Musk is betting that the purchase of electric cars will expand exponentially in the coming years. Because of this, the businessman opened two new Tesla factories, one in Berlin to serve the European market and one in Austin, Texas, to supply the United States. The factories called by the owner “gigafactories” are the size of 100 football fields and the capacity to double the company's production.
Tesla is not alone in exploring this new market: the Volkswagen announced that several of the company's electric cars are sold out by next year. In 2021, Volkswagen's electric vehicle sales doubled. In addition, US President Joe Biden aims that by 2030, half of the country's vehicle fleet will be electric cars.
These plans justify the concern regarding the minerals used in the battery manufacturing of electric cars. Lithium, a metal that has more than 80% of its destination for the manufacture of batteries, is traded today for about US$ 80,000 per ton, which means an increase of more than 400% in price in a year. Nickel, copper and cobalt are also on the rise, which was accentuated by the rise in oil prices and the Russian conflict with Ukraine.
This increase brings opportunities for the Brazil, since the country has reserves and has already explored these minerals at some point. Brazil has the third largest nickel reserves in the world, after Indonesia and Australia. Currently, the country has modest extraction rates, and much of the mineral extraction today takes place in a municipality in Goiás, called Niquelândia, where there are also cobalt deposits.
Vale, the largest mining company in the country, is also a producer of nickel and cobalt in the mines belonging to its subsidiary in Canada, as well as copper in Pará. Currently, around 5% of the high-purity nickel produced by the mining company is used to manufacture electric car batteries, but the goal is to increase this share to 30% to 40%. Tesla closed a secret clauses deal with Vale.
According to the mining analyst at Itaú BBA, Daniel Sasson, “The agreement between Tesla and Vale is much more strategic than commercial. It makes sense for companies that will be major consumers of nickel in the future to enter into agreements to secure this supply.”
In 2022, the nickel price even surpassed the mark of US$ 100,000 per tonne, almost double the all-time high in 15 years, which forced the London Metal Exchange to suspend trading. After that, the price has settled down and nickel is trading around US$ 32,500.
Vale, which was among the three largest nickel producers in the world until 2020, is currently the largest in the market. According to Veja magazine, in 2021 the company produced 168 thousand tons of nickel and the estimate for 2022 is up to 190 thousand tons of nickel and 355 thousand tons of copper.