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2. Musk looking at moves to shore up Tesla’s lithium supply as bottlenecks stifle growth

01 November 2022, 12:36

- Tesla looking at long-term lithium supply security

- Talks to take stake in miner came to nothing

- Musk confirmed Tesla’s own Texas-lithium plant

Elon Musk is reported to have held talks with Glencore (GLEN) regarding Tesla (TSLA:NASDAQ) buying a stake in the mining group in an attempt to shore up the electric car maker’s access to lithium supplies.

Preliminary discussions began last year, according to the FT, around a plan for Tesla to buy a 10% to 20% stake in Glencore. But the talks came to nothing with Musk believed to be concerned about how Glencore’s large coal mining operations would tally with Tesla’s environmental commitments.

Lithium is a key raw material used for making batteries that power EVs, a commodity that has become increasingly expensive and difficult to source this year.

‘Price of lithium has gone to insane levels,’ Musk tweeted in April. ‘There is no shortage of the element itself, as lithium is almost everywhere on Earth, but the pace of extraction/refinement is slow.’

Most lithium mining happens in Australia from hard-rock sources and in Chile from brines. But lithium refining is dominated by China, which currently accounts for more than 75% of global lithium processing capacity.

TESLA LITHIUM REFINARY GETS GO-AHEAD

Last month, Tesla announced that it would move ahead with plans to build a lithium refinery on the Texas Gulf Coast in a bid to gain more control over the supply chain for electric vehicle batteries.

Tesla has been mulling over the project for months, and has told state regulators it plans to build a battery-grade lithium hydroxide refining facility near Corpus Christi that would process raw ore material into something more production-ready.

Analysts have been broadly sceptical over whether Musk has the appetite to invest in mining groups or trading houses, suggesting his comments have largely been intended to jolt raw material suppliers into increasing output.

Musk urged entrepreneurs and investors to enter the lithium-refining business in July, saying that the mining is relatively easy, the refining is much harder. Musk has said he believes there are software-like margins to be made in lithium processing. ‘You can’t lose, it’s a license to print money,’ he said on a July call with analysts