Tesla partners with New Caledonia to secure nickel supply

Electric vehicle maker Tesla will become a technical adviser at the New Caledonia nickel mine as part of the company’s attempt to secure stocks of the essential battery metal, reports Reuters.

The deal signed by pro-independence and loyalist leaders in the French Pacific territory cited a “technical and industrial partnership” with Tesla, under which the electric car company would source raw materials for batteries.

Brazilian miner Vale’s decision last year to sell its nickel mine and processing plant to a consortium including Swiss commodity trader Trafigura sparked fierce opposition from pro-independence groups.

Violent protests led Vale to shut down the site in December.

Under the recent agreement, political groups proposed that a 51% stake in the Vale operations be held by New Caledonia’s provincial authorities and other local interests. Trafigura would have a 19% stake, less than the 25% planned in the initial sale deal with Vale.

The parties also called for reinforced environmental standards and set a target for the mining complex to be carbon neutral by 2040.

Vale and Trafigura welcomed the political agreement.

“Our task now is to complete any and all outstanding items to allow the transaction to formally conclude,” Vale said in a statement.

The company, which has tried to sell the New Caledonian assets for years, has said around 3,000 direct and indirect jobs depend on the restart of its mining complex.

“We’re looking forward to operations resuming and for final completion of the transaction as soon as possible,” a Trafigura spokesperson said.

Tesla did not immediately respond to a request for comment.

The electric vehicle maker would act as an industrial partner to help with product and sustainability standards as well as taking some supply for its battery production, according to the political agreement.

Demand for nickel, mainly used in making stainless steel, is expected to be boosted by demand for electric vehicle batteries.

New Caledonia is the world’s fourth-largest nickel producer. Its nickel industry also includes the SLN subsidiary of French mining group Eramet and a joint venture between commodity group Glencore and New Caledonia’s northern province.