Tesla held discussions over taking stake in Glencore

Tesla held talks with Glencore about taking a stake within the Swiss commodities group, in an indication of how international carmakers are in search of to construct ties with the mining trade to safe supplies wanted for the rollout of electrical autos.

Preliminary discussions about Elon Musk’s electrical automobile and battery maker shopping for 10-20 per cent of Glencore started final yr, in response to two individuals aware of the matter.

They continued in March this yr, when Glencore chief govt Gary Nagle visited Tesla’s manufacturing facility in Fremont, California as a part of a roadshow for the mining firm’s annual outcomes.

Nonetheless, the discussions ended with no deal reached, in response to the 2 individuals. Tesla had issues over whether or not Glencore’s in depth coal mining enterprise was suitable with the carmaker’s environmental targets, and was reluctant to take a minority fairness stake.

The rise of electrical autos has prompted concern amongst carmakers and battery makers about securing provides of uncooked supplies comparable to cobalt, lithium, and nickel which are wanted to fabricate batteries.

Glencore is the world’s largest listed buying and selling home and largest producer of cobalt by way of its mines within the Democratic Republic of Congo, Australia and Canada. Two years in the past Tesla secured a cobalt offtake settlement with the Swiss group to produce its factories in Shanghai and Berlin.

Musk has beforehand outlined Tesla’s intention to take higher management of all manufacturing steps of its batteries, together with processing the uncooked supplies and even shopping for lithium deposits nonetheless within the floor, if the availability chain fails to ship.

In April, the billionaire took to Twitter, the social media web site he purchased this week, to voice his issues about lithium prices: “Tesla would possibly really should get into the mining & refining straight at scale, until prices enhance”. The value of lithium has risen eightfold because the begin of 2021,

Tesla can also be advancing with plans to construct its personal lithium hydroxide refinery on the Texas Gulf Coast.

Glencore produces cobalt, nickel, copper and different minerals, and can also be one of many world’s largest recyclers of batteries. It doesn’t mine lithium however lately began to commerce the steel.

Analysts have been broadly sceptical over whether or not Musk has the urge for food to spend money on mining teams or buying and selling homes, suggesting his feedback have largely been meant to jolt uncooked materials suppliers into growing output.

As electrical car manufacturing will increase, carmakers are scouring the globe to safe the uncooked supplies they want, triggering a flurry of offtake agreements — multiyear offers to produce uncooked supplies.

Glencore already has cobalt offtake agreements with battery makers SK Innovation and Samsung SDI, and carmakers BMW and GM.

In addition to its cobalt offtake settlement with Glencore, Tesla has struck a long-term deal for nickel provide from Brazilian mining group Vale.

Ford has a lithium offtake settlement with Australia-based Liontown Assets that features stumping up financing for the challenge upfront, and has taken a minority stake in a nickel ore processing plant in Indonesia.

Carmakers Stellantis, shaped by the merger of Jeep proprietor Fiat Chrysler and Peugeot proprietor PSA final yr, and Common Motors have invested in early-stage mining teams.

Nonetheless, huge automobile teams have thus far been reluctant to take direct stakes in mining majors. Many within the trade consider that extra bold investments will finally observe.

Tesla didn’t reply to a request for remark. Glencore declined to remark.

Extra reporting by Richard Waters.