Tesla cuts deal for Minnesota nickel
Talon's commitment to responsible mining attracts EV maker Metal Tech News – January 12, 2022
Last updated 1/18/2022 at 5:26am
As the competition for supplies of the minerals and metals needed to build electric vehicles heats up, Tesla Inc. has cut a deal to secure the nickel for the lithium-ion batteries to power its future EVs from Talon Metals Corp.'s Tamarack project in Minnesota.
Located 54 miles west of Duluth, the Tamarack project is slated to produce roughly 28 million pounds of nickel, plus 17 million lb of copper, per year over the first nine years of mining.
Talon's commitment to reducing the environmental and carbon footprint at its proposed Tamarack Mine played a significant role in Tesla considering this a future North American nickel source.
During Tesla Battery Day 2020, CEO Elon Musk famously said, "Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way. So, hopefully, this message goes out to all mining companies – please get nickel."
Answering Musk's call for responsibly mined nickel, Talon and Rio Tinto, which are joint venture partners at Tamarack, have been working with California-based CarbonCapture to store carbon dioxide at the proposed nickel mine in Minnesota.
"The Talon team has taken an innovative approach to the discovery, development and production of battery materials, including to permanently store carbon as part of mine operations and the investigation of the novel extraction of battery materials," said Drew Baglino, senior vice president of powertrain and energy engineering at Tesla. "Responsible sourcing of battery materials has long been a focus for Tesla, and this project has the promise to accelerate the production of sustainable energy products in North America."
As such, Tesla has committed to purchasing 165 million lb of nickel in concentrate over six years, which is roughly equivalent to the total Tamarack production as outlined in a preliminary economic assessment for the future mine. Tesla's purchase price for the nickel will be based on London Metals Exchange prices – detailed terms are still being negotiated.
"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 Metals CEO Henri van Rooyen. "Talon is committed to meeting the highest standards of responsible production that is fully traceable and that has the lowest embedded CO2 footprint in the industry."
The agreement is conditional upon Talon earning a 60% interest in Tamarack from Rio Tinto. Talon, which earned a 51% interest in the nickel project last year, can increase its JV ownership to 60% through the completion of a feasibility study that details the proposed mine, and paying Rio Tinto US$10 million.
Talon has also agreed to make every reasonable effort to be producing nickel at Tamarack by the end of 2025. This deadline could be extended by a year before Tesla has the right to look elsewhere for nickel to go into the lithium-ion batteries powering its EVs.
In the meantime, Tesla will work with Talon to optimize nickel concentrate grades and metal recoveries. The parties have also agreed to share in any additional economics derived from byproducts such as cobalt.
"Talon is excited to support Tesla's mission to accelerate the transition to renewable energy," said van Rooyen.