Lithium, cobalt, nickel: Tesla wanted to buy 20% of Glencore

Lithium, cobalt, nickel: Tesla wanted to buy 20% of Glencore


Tesla has apparently considered buying up to a 20% stake in Swiss commodities group Glencore. Around EUR 16 billion would be due to this. Ultimately, Elon Musk refrained from joining the company out of concern for his company’s environmental goals.

Like The Financial Times reportsIt has Tesla (WKN: A1CX3T, ISIN: US88160R1014, Tick: TSLA) last year talks about stocks in the raw materials group Glencore (WKN: A1JAGV, ISIN: JE00B4T3BW64, Tick: GLCNF) guided. The American automaker, led by CEO Elon Musk, apparently wanted to get up to a 20% stake. Purpose: to obtain its supply of essential metals for batteries.

As the FT reports further, talks that began last year continued in March this year. At the time, Glencore CEO Gary Nagle had visited Tesla’s factory in Fremont, California as part of his company’s roadshow.

Elon Musk wanted to “go straight to mining”

Ultimately, however, no agreement was reached. The reason for this, according to the Financial Times, is the large coal mining business of Glencore. Elon Musk obviously wasn’t sure if the entry would match his company’s environmental goals.

Musk has been talking about battery metals, and lithium in particular, in the past. He described the assessment that lithium production is a business “like printing money”.

In April, he expressed his concern about the high cost of lithium via Twitter. Tesla may therefore have to go directly to Mining and clean up if costs are not improved. The automaker is now working on a lithium hydroxide refinery in Texas.

Glencore would have closed the portfolio in terms of precious metals. The Swiss produce cobalt, nickel, copper and other minerals. The company is also one of the largest producers of batteries. However, lithium mining is not part of the business – but the business is.

Close contact with the automotive industry is also not new to Glencore. The Swiss already have an agreement to buy cobalt BMW (WKN: 519003, ISIN: DE0005190037) and General Motors (WKN: A1C9CM, ISIN: US37045V1008) and battery manufacturers SK Design (WKN: A0MV9D, ISIN: KR7096770003) and Samsung SDI (WKN: 923086, ISIN: US7960542030) it is closed. Tesla has also been buying cobalt from Glencore for two years.

In the cobalt business, Glencore is well known through its location in the Democratic Republic of the Congo. Australia and Canada the world’s largest producer.

Junior Miner as a coveted partner of the automotive industry

Direct purchase agreements between car and battery manufacturers and raw material producers are becoming more common. Major trading houses and mining operators such as Glencore, Trafigura, Rio Tinto (WKN: 852147, ISIN: GB0007188757), BHP (WKN: 850524, ISIN: AU000000BHP4) etc. attractive to the sector.

Rock Tech Lithium (WKN: A1XF0V, ISIN: CA77273P2017) A few weeks ago, for example, a long-term plan was put in place Mercedes-Benz (WKN: 710000, ISIN: DE0007100000) a. The company, which is currently valued at around EUR 220 million, intends to mine raw materials in Canada and refine them in Germany. There are many other examples of such cooperation.

Lithium is currently considered the rarest of battery metals. The price of raw materials has increased in recent years. 1 t of lithium hydroxide currently costs around USD 82,000. Almost all market projections expect a long-term decline in demand.

Secure supply chains are becoming increasingly important

The availability of raw materials is not the only problem facing car and battery manufacturers. It is also about secure supply chains and possible greater independence from countries that are not classified as highly reliable.

In the United States, for example, tax credits for electric vehicles are linked to the origin of the raw material. Canada recently pushed three Chinese companies out of the domestic lithium market.

The chances of young innovation companies developing lithium projects in countries classified as safe and possibly bringing supply to market within a few years are equally good. An example of this is Lithium Resource & Technology Ltd. (CSE: FAT, FSE: F0R0, ISIN: CA3455101012). The company is exploring six early stage lithium hard rock projects in Manitoba, Canada.