Electric Vehicle manufacturer, Tesla Inc. (TSLA) has signed a deal to wane its dependence on China for graphite, turning to Mozambique instead. Graphite is a key component in Tesla’s electric car batteries.
Yahoo Finance reports that Tesla has signed an agreement in December 2021 with Australia’s Syrah Resources.
Syrah Resources operates one of the world’s largest graphite mines in Mozambique. Its owns and operates Balama Graphite Operation in Mozambique. It also operates a downstream Active Anode Material facility in the United States.
The Tesla – Syrah Resources will be a unique partnership between an electric vehicle manufacturer and a producer of the mineral that is critical for lithium-ion batteries. The value of the deal hasn’t been released.
Elon Musk’s company will buy the material from the company’s processing plant in Louisiana, which sources graphite from its mine in Balama.
Austin Texas based Tesla plans to buy up 80% of Syrah Resources’ plant produce – 8,000 tons of graphite per year – starting 2025, according to the agreement.
The deal is part of Tesla’s plan to ramp up its capacity to make its own batteries so it can reduce its dependence on China, which dominates global graphite markets, said Simon Moores of United Kingdom-based battery materials data and intelligence provider, Benchmark Mineral Intelligence.
The battery industry has been confronted with a short supply of graphite in recent months. Graphite stores lithium inside a battery until it’s needed to generate electricity by splitting into charged ions and electrons.
Tesla is making almost a million electric cars per year, and sourcing enough batteries is its biggest constraint.
Tesla is building a ew battery factory that the company is building in its new hometown of Austin, Texas, which will allow it to get closer to self-sufficiency.
The Syrah deals brings the graphite processed in Louisiana much closer to Tesla’s U.S factories.
For China, the deal is unlikely to rankle its government because China has plenty of markets for its graphite, including increased domestic electric vehicle production.
China, though, is Tesla’s biggest global market. It has a giant factory near Shanghai and sells about 450,000 vehicles per year there, compared with about 350,000 in the U.S.
For the Australian mining firm, the deal is “crucial” because it has a non-Chinese purchaser for its graphite product. Syrah’s graphite mine in Mozambique’s northernmost province, Cabo Delgado, is one of the world’s largest, with an ability to produce 350,000 tons of flake graphite a year.
Cabo Delgado has faced violence in recent years by Islamic extremists, an insurgency that has recently extended inland from coastal areas toward the neighboring Niassa province.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur