Tesla Directly Purchases Nickel Following Cobalt for Battery Raw Materials
Car Industry Demand Drives Cobalt Prices Up 46% and Lithium 59% This Year
LG Energy-GM Discuss Additional Second Battery Plant Construction in the US
[Asia Economy New York=Correspondents Baek Jong-min and Jo Yoo-jin] Elon Musk, CEO of Tesla, who had said "Nickel is the biggest concern," has taken action. On the 4th (local time), a major foreign media outlet reported, citing sources, that Tesla has partnered with the New Caledonia government, one of the largest nickel producers, to serve as a technical advisor for nickel mines and simultaneously signed a long-term supply contract.
The automaker has moved to directly purchase raw materials used in batteries. This move is seen as symbolically representing the battery securing battle that has emerged as global automakers rapidly shift to electric vehicles.
◆ Tesla Directly Purchases Nickel Following Cobalt = Nickel is an essential mineral for manufacturing lithium-ion batteries. Last month, Musk mentioned on his Twitter account that "Nickel is the biggest concern in lithium-ion battery cell manufacturing." Tesla had previously signed a cobalt supply contract with Glencore, the world's largest mining company, for another essential battery mineral.
Foreign media evaluated Tesla's move as an intention to control the entire battery supply chain. Tesla is promoting in-house battery production by building gigafactories in places like Austin, Texas.
As the U.S. government begins reviewing supply chains for semiconductors, batteries, and rare earths, other automakers are also proactively responding. Given recent experiences with semiconductor shortages for automobiles, securing a stable supply chain for batteries, essential for electric vehicle production, is considered a natural step.
◆ Raw Material Prices Surge Amid Battery War = As global automakers rush to announce strategies for transitioning to electric vehicles, prices of key battery raw materials are also soaring.
According to Bloomberg News, cobalt prices in the international commodity market rose 46.66% to $46,769 per ton at the end of last month compared to $31,891 at the end of last year. Nickel prices also increased to $18,612 per ton from $16,807 at the end of last year. Lithium prices rose 59.09% to 70 yuan from 44 yuan at the end of last year, and manganese prices increased 17.33% to $1,395 from $1,189 at the end of last year.
Nickel, whose main production sites are concentrated in Africa, surged to its highest level in six years since September 5, 2014 ($19,380) due to political instability and security issues causing supply concerns. However, it has recently stabilized following news that China's Tsingshan Group is developing nickel mines in Indonesia.
Roskill, a metal and mineral consulting firm, stated, "The recent surge in nickel prices is a result of increased demand for batteries used in electric vehicles," adding, "Nickel prices are expected to continue rising over the next decade."
◆ LG-GM to Add Battery Plants = The Wall Street Journal (WSJ) reported on the same day, citing sources, that General Motors (GM), the largest U.S. automaker, is considering building an additional automotive battery plant with LG Energy Solution.
WSJ reported that although the two companies are currently investing $2.3 billion (about 2.7 trillion won) to build a battery plant in Ohio, they are discussing constructing another battery plant near GM's automobile assembly plant in Spring Hill, Tennessee.
WSJ explained that GM acknowledged the push for a second battery plant and mentioned that a decision is expected within the first half of the year. Since GM has declared it will cease production and sales of internal combustion engine vehicles starting in 2035, a stable battery supply is essential.
LG also mentioned that it is in discussions with GM to add battery plants. According to WSJ, LG revealed plans to expand its U.S. battery manufacturing business to support other automakers as well. Previously, SK Innovation also announced plans to build an additional plant in Georgia to the U.S. government.
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