Tesla has struck a nickel-supply deal with BHP Group, as the electric-car maker seeks to protect itself from a future supply crunch.
BHP will provide the automaker with the metal from its Nickel West operation in Western Australia, the world’s biggest miner said in a statement. BHP gave few further details, but said the companies would work together to make the battery supply chain more sustainable.
Telsa’s billionaire boss, Elon Musk, has repeatedly expressed concern about future supplies of nickel due to challenges in sustainable sourcing. Musk has pleaded with miners to produce more nickel, with demand set to skyrocket as the world increasingly moves toward electric vehicles.
Nickel is a key component in lithium-ion batteries, used in electric vehicles. It packs more energy into batteries and allows producers to reduce use of cobalt, which is more expensive and has a less transparent supply chain.
Telsa has struck a string of deals with mining companies for the commodities it needs to make batteries, including cobalt pacts with Glencore Plc and supporting a nickel venture in New Caledonia.
For BHP, it marks a turnaround for the company’s Nickel West business. The company unsuccessfully tried to sell the unit in 2014 and has since pivoted it to serve battery makers, rather than traditional customers such as the stainless steel industry.
Bloomberg originally reported that the two companies were in talks in October.