Tesla Supplier LG Strikes 6-Year Deal With Australian Mining Company For Cobalt, Nickel

Tesla Inc.(NASDAQ:TSLA) battery supplierLG Energy Solutionsaid it has entered into a six-year deal with an Australian mining company for the stable supply of key battery materials - cobalt and nickel.

What Happened:LG Energy, a subsidiary of South Korea-based LG Chem, said it will purchase 71,000 tons of nickel and 7,000 tons of cobalt fromAustralian Mines Limitedfor six years, starting from the end of 2024.

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The six-year supply deal would translate to producing batteries that can power 1.3 million high-performance electric vehicles.

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Why It Matters: In addition to Tesla, LG Chem supplies EV batteries to automakers such asGeneral Motors Co.(NYSE:GM) andVolkswagen AG(OTC:VWAGY).

The battery is the key component of an EV as it accounts for roughly 30% of the cost. The race to procure raw materials for EV batteries is intensifying amid growing global demand for EVs.

It wasreportedin July that Tesla signed a deal to secure nickel supplies from mining giantBHP Group Ltd.(NYSE:BHP), as theElon Musk-led company rushes to secure raw materials for its batteries.

The Palo Alto-based automaker already sources three-quarters of lithium and over a third of its nickel feedstock from mineral-rich Australia