Tesla has signed another purchase order to purchase 75,000 tons of nickel concentrate in the next six years

On Monday, Tesla announced that it had signed a six-year contract to supply 75,000 tons of nickel, its first nickel supply agreement in the United States. Tesla chose Talon Metals Corp's Tamarack mine project in Minnesota as its supplier side because the company plans to produce nickel in a more environmentally friendly way.

Nickel can enhance the energy storage capacity of the negative electrode of the battery and is an important material for extending the range of electric vehicles. As electric vehicles will gradually become mainstream over the next 10 years, the demand for nickel is expected to grow significantly.

Tesla CEO Elon Musk has repeatedly expressed the need for nickel. He had pleaded with the mining industry in 2020 to produce more nickel "in an environmentally friendly way" and complained that nickel production in the United States was "objectively poor."

In July, Tesla signed a nickel supply contract with Nickel West, a subsidiary of Australian mining giant BHP Billiton, and in October last year, Tesla signed a procurement contract with Prony Resources, a mining company based in New Caledonia, with plans to purchase about 42,000 tons of nickel.

According to the latest reports, Tesla announced on Monday that it plans to purchase 75,000 tons of nickel concentrate, as well as a small amount of cobalt and iron ore, from Talon's project in Minnesota over the next six years at the listing price of the London Metal Exchange.

With this purchase, Musk secured a critical source of nickel for Tesla's battery plants in Texas and Nevada. The Tamarak project, which is allegedly operated by a joint venture between Talon and Rio Tinto, is scheduled to open in 2026.

Talon Metals reportedly plans to use technology to reduce pollution in nickel extraction and waste disposal processes, thereby bringing nickel to market through carbon neutral means, which is a huge attraction for Musk and Tesla.

"Responsible search for battery materials has always been a priority for Tesla." Drew Baglino, a Tesla executive, said in a press release.

"Talon is excited to support Tesla's mission to accelerate the transition to renewable energy." Talon CEO Henri van Rooyen said in a statement.

Given that there are no nickel smelters in the U.S., it's unclear where Tesla will refine the nickel concentrate.

Just before the news was released, Talon's stock had been suspended. Tesla shares closed up 3 percent on Monday.

In 2020, Tesla and Piedmont lithium Inc. An agreement was signed to supply lithium to its Texas battery plant. But last year, the deal was temporarily terminated due to growing north Carolina's opposition to a proposed lithium-mining project in Piedmont.