Tesla Strikes Nickel Supply Deal with Talon Metals’ Minnesota Project for 4680 Battery Production

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Talon Metals has entered into a deal with Tesla for the supply of nickel concentrate. Under the deal, Tesla will buy 75,000 tonnes of nickel over six years, with an option to increase the volume. According to current prices, the deal is worth more than $1.5 billion.

Talon Metals, through its US subsidiary Talon Nickel, has entered into an agreement with Tesla to supply and purchase nickel concentrate to be produced as part of the Tamarack Nickel project in Aitkin County, Minnesota. The execution of the agreement follows an extensive and detailed due diligence period performed by Tesla and lengthy negotiations between the parties, the company said in Talon Metals' press release.

Under the terms of the agreement, Tesla has pledged to purchase 75,000 metric tons (165 million pounds) of nickel in concentrate, which is projected to be produced through the Tamarack Nickel project. The Texas-based manufacturer also has a preemptive right to negotiate the purchase of additional nickel concentrate in excess of its original commitment of 75,000 metric tons. The agreement will last for six years, or until a total of 75,000 metric tons of the agreed material is produced and delivered to Tesla.

Talon is committed to making commercially reasonable efforts to go into commercial production by January 1, 2026, at the Tamarack Nickel Project. If this does not happen before the set date, then the waiting period can be extended by agreement of the parties for up to 12 months, after which Tesla has the right to terminate the agreement, and Talon can decide to sell to other parties.

Talon and Tesla will work together to optimize nickel concentrate grades and metal recovery. The purchase price Tesla will pay for nickel in concentrate will be pegged to the official London Metal Exchange (LME) settlement price for nickel. However, taking today's material price as a starting point, the deal is worth $1.5 billion. The parties also agreed to share in any additional economic benefits derived from by-products extracted from nickel concentrate, such as iron and cobalt.

The Tamarack Nickel Project caught Tesla's attention for a reason. The Texas-based manufacturer is committed to sourcing materials that have been sourced in a responsible and highly carbon-neutral manner. The Tamarack project in cooperation with CarbonCapture intends to use in the production a machine that removes carbon dioxide directly from the atmosphere. This machine uses new technology and is a renewable energy-powered Direct Air Capture (DAC) system that enables, for the first time, the use of zeolites for capturing CO2.

“This agreement is the start of an innovative partnership between Tesla and Talon for the responsible production of battery materials directly from the mine to the battery cathode. Talon is committed to meeting the highest standards of responsible production that is fully traceable and that has the lowest embedded CO2 footprint in the industry. Talon is excited to support Tesla's mission to accelerate the transition to renewable energy,” said Henri van Rooyen, CEO of Talon.

“The Talon team has taken an innovative approach to the discovery, development and production of battery materials, including to permanently store carbon as part of mine operations and the investigation of the novel extraction of battery materials. Responsible sourcing of battery materials has long been a focus for Tesla, and this project has the promise to accelerate the production of sustainable energy products in North America,” said Drew Baglino, SVP of Powertrain and Energy Engineering at Tesla.

© 2022, Eva Fox | Tesmanian. All rights reserved.

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