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Tesla will become a strategic partner of one of the largest nickel mines

Mining industry / Australia

New Caledonia's huge nickel reserves are critical to the local economy, and the Goro mine in the south of the island could become one of the largest nickel producers in the world.

Tesla will become a strategic partner of one of the largest nickel mines

On Thursday, New Caledonian political parties reached an agreement to sell a key nickel mine in the region, triggering a crisis in the French-Territory government and jeopardizing the third independence vote scheduled for next year.

The huge Goro mine has been closed since December, when striking workers tried to storm administrative buildings to prevent it from being sold to Brazilian mining giant Vale.

New Caledonia is an overseas territory of France, located on dozens of islands in the South Pacific.

The mine will be sold to a consortium, which now includes employees as well as representatives from the three regional provinces, in a new deal struck by independence groups, loyalist parties and indigenous Kanaks.

Tesla has decided to become a technical partner for the developer of the nickel mine, whose products are needed for lithium-ion batteries for electric vehicles. Elon Musk's automotive firm will buy nickel from the Goro mine to ensure its long-term supply.

The move comes amid growing concerns about future nickel supplies.

New Caledonia is the fourth largest nickel producer in the world, with prices up 26% over the past year.

“Nickel is our biggest challenge for increasing production of lithium-ion cells,” Musk said on Twitter last month.

Under the agreement, Tesla will engage in a "technical and industrial partnership" to help with sustainability products and standards, and use nickel to make batteries.

The automaker will play the role of technical consultant in the development and improvement of the manufacturing process.

Mining company Vale said the deal "will enable production to continue on a sustainable path into the future, saving jobs and bringing economic benefits to the country."

Nickel is mined primarily in Russia, Canada, New Caledonia and Indonesia and is mainly used to make stainless steel. But the rise in electric vehicle production has added a new source of demand for the skyrocketing metal.

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