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Tesla inks deal to get key battery component outside China


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Tesla is turning to Mozambique for a key component in its electric car batteries in what analysts believe is a first-of-its-kind deal designed to reduce its dependence on China for graphite.

Elon Musk and his company have signed an agreement to work with Australia’s last month Syrah ResourcesThe company operates the largest graphite mines anywhere in Africa. The partnership was unique and includes a manufacturer of electric vehicles as well as a supplier of vital minerals for lithium-ion cells. It’s not known what the value of this deal is.

Tesla will purchase the raw material at the Vidalia, Louisiana plant. The company sources its graphite in Balama (Mozambique) mine. The Austin, Texas-based electric automaker plans to buy up 80% of what the plant produces — 8,000 tons of graphite per year — starting in 2025, according to the agreement. Syrah has to show that the material is compliant with Tesla’s specifications.

According to Simon Moores from Benchmark Mineral Intelligence (UK-based data and intelligence provider), the deal was part of Tesla’s effort to expand its production capacity so that it can lessen its dependence on China.

Moores stated that “it starts at the top, with geopolitics.” “The U.S. seeks to grow enough domestic capacity so that it can build lithium-ion battery units within the USA. This deal will allow Tesla to source graphite from China independently.

Moores stated that producing batteries in America will help to reduce the concerns Tesla has about its connections with China. There are also environmental issues at certain mines. The automaker also has set up a showroom in the region of XinjiangChina officials have been accused in the United States of forced labor against predominantly Muslim ethnic minorities.

Tesla’s media relations team has been disbanded. A message was left to request comment.

Moores explained that graphite has become scarce in the recent months. Graphite is a substance that stores lithium in a battery. It can then be used to produce electricity through the splitting of charged ions into electrons.

This is a good sign that every automaker wants to make electric cars, despite concerns over climate change.

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Tesla makes almost 1 million electric cars each year. The biggest problem is sourcing the right batteries, said he.

Moores stated that although they have increased their battery production capacity, Moores claimed that “they still can’t get enough” batteries.

The company’s new Austin battery factory will help it get closer to self sufficiency. Moores stated that it still buys batteries from other companies, and that this won’t change in the next decade.

Tesla and Panasonic have a deal to manufacture battery cells in the battery factory of Tesla near Reno.

Syrah’s deal is part a larger effort of automakers to procure scarce materials for their batteries, as electric vehicle demand is predicted to rise, according to Sam Abuelsamid principal analyst at Guidehouse Insights.

It also makes the graphite that was processed in Louisiana more accessible to Tesla’s U.S. facilities.

“The pandemic pointed out to us that we’ve got these long, long, long supply chains, and it doesn’t take much to disrupt a supply chain,” said Donald Sadoway, a professor of materials chemistry at the Massachusetts Institute of Technology. One could suddenly say “We are going to raise the prices” or “We won’t ship it.”

Abuelsamid stated that it is unlikely that Syrah’s Tesla deal will upset China because China has many markets for its graphite including an increase in domestic production.

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China is Tesla’s most important global market. Abuelsamid stated that China has a huge factory in Shanghai, and it sells approximately 450,000 cars per year, as compared to 350,000 units in the United States.

Moores stated that the deal was “crucial” for the Australian mining company because it now has a buyer not from China for its graphite products.

Syrah’s graphite mine, Cabo Delgado in Mozambique’s northernmost Province, produces 350,000 tonnes of flake graphite per year.

Cabo Delgado is a victim of violence from Islamic extremists over the years. They recently moved inland to neighboring Niassa Province.

It is located on the main road that connects the Niassa and Cabo Delgado provinces. A Chinese contractor recently improved the thoroughfare. In December at a ceremony for the reopening of the road, President Filipe Nyusi urged people to be vigilant so that the road doesn’t become a battlefield for insurgents.