Tesla is turning to Mozambique for a key component in its electric car batteries in what analysts believe is a first-of-its-kind deal designed to reduce its dependence on China for graphite.
Elon Musk's company signed an agreement last month with Australia's Syrah Resources, which operates one of the world´s largest graphite mines in the southern African country. It's a unique partnership between an electric vehicle manufacturer and a producer of the mineral that is critical for lithium-ion batteries. The value of the deal hasn't been released.
Tesla will buy the material from the company's processing plant in Vidalia, Louisiana, which sources graphite from its mine in Balama, Mozambique. The Austin, Texas-based electric automaker plans to buy up 80% of what the plant produces - 8,000 tons of graphite per year - starting in 2025, according to the agreement. Syrah must prove the material meets Tesla´s standards.
The deal is part of Tesla's plan to ramp up its capacity to make its own batteries so it can reduce its dependence on China, which dominates global graphite markets, said Simon Moores of United Kingdom-based battery materials data and intelligence provider, Benchmark Mineral Intelligence.
"It starts at the top with geopolitics," Moores said. "The U.S. wants to build enough capacity domestically to be able to build (lithium-ion batteries) within the USA. And this deal will permit Tesla to source graphite independent from China."
Moores said producing the batteries in the U.S. will reduce some of the questions Tesla is facing about its ties to China, where there are environmental concerns at some mines. The automaker also has set up a showroom in the region of Xinjiang, where Chinese officials are accused of forced labor and other human rights abuses against mostly Muslim ethnic minorities.
