Tesla can't dodge the deep-sea mining talk | Mounting environmental pressure on Indonesian nickel
Weekly mining & batteries updates (April 1- 7)
What’s big last week?
1. Mining/ Minerals: Indonesia nickel under pressure; Tesla needs to talk about deep-sea mining; Canadian Electra Battery Materials secures cobalt supply in Congo
2. Batteries/ EVs: Tesla plans EV plant in India; Stellantis CEO calls for lighter EV battery
Mining/ Minerals
Environmental and biodiversity issues are increasingly influencing the battery supply chain, especially with the influx of cheap nickel from Indonesia, which has been linked to serious environmental consequences. As the cheap Indonesian nickel squeezed several nickel operations globally out of business, many mining majors are trying to advocate for better industry practices. For example, BHP proposed higher pricing of certified lower-carbon nickel on the London Metal Exchange (LME), seeking to establish a green premium that set their products apart (sadly failed because LME doesn’t believe it justifies a large enough market)
In the past week, Fortescue's former CEO warned EV makers against using Indonesian nickel because of its detrimental environmental impact, urging China to enforce stricter environmental standards for its nickel processing in Indonesia.
As of 2024, 82% of Indonesia’s battery nickel output comes from the majority of Chinese-owned producers. That being said, this number is expected to decrease to roughly 54% by 2033.
Despite the drop in nickel prices, Indonesia is still planning to expand its nickel production further, potentially wiping out more competitors in the near future.
Not only in Indonesia, where deforestation and water contamination linked to mining are reported, but also in Africa, one-third of gorillas, bonobos, and chimpanzees are endangered due to their habitats overlapping with mining operations for energy transition metals.
Investors exert pressure for better environmental practices — Norway's $1.6 trillion sovereign wealth fund is considering selling its multibillion-dollar stake in Rio Tinto due to concerns about environmental damage from its operations in the Brazilian Amazon.
Of course, not just traditional mining, environmental impacts around deep-sea mining are also concerning.
The SEC has allowed an activist proposal on sea-floor mining to be discussed in Tesla's upcoming annual general meeting. The proposal, filed by As You Sow, urges Tesla to commit to a deep-sea mining moratorium, citing concerns over reputational and regulatory risks. Tesla's request to omit the proposal was rejected by the SEC.
This resolution is part of As You Sow's biodiversity program, aiming to address shareholder concerns about biodiversity loss and ecosystem collapse.
As You Sow also submitted a proposal to General Motors (GM) earlier this year, focusing on disclosure policies regarding the use of deep-sea-mined minerals in its production and supply chains.
EV makers like BMW, Volvo, Volkswagen, Rivian, and Renault have pledged to uphold a global moratorium on deep-sea mining until sufficient scientific findings assess its environmental risks.
More on climate equity, as the Canadian federal government plans to launch an Indigenous loan guarantee program in the upcoming budget, set for release on April 16. The Director General at the Ministry of Natural Resources revealed that the program aims to facilitate Indigenous equity ownership in major projects.
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Electra Battery Materials has struck a deal with Eurasian Resources Group to purchase cobalt sourced from Congo for their refinery in Canada. The binding letter of intent outlines the supply of 3,000 tons of cobalt hydroxide annually, starting in 2026, over three years.
Battery/ EVs
Oil majors rushing into the battery space
Indian Oil Corporation and Panasonic Energy have agreed to a JV for producing cylindrical lithium-ion battery cells in India, responding to the rising demand for two and three-wheel EVs and energy storage systems. Benchmark data shows that India aims to reach a cell capacity of 58 GWh by 2030.
Other oil giants like Sinochem and Saudi Aramco have also either directly invested in battery projects or hold stakes in battery companies.
Indian Oil Corporation, the country's largest state-owned oil production company, has a net zero target by 2046.
It is also interesting to see how India is gaining traction in the battery supply chain. Besides battery plants, Tesla is scouting locations in India for a potential $2-3 billion EV plant. This move follows New Delhi's recent tariff reduction on imported EVs for companies willing to manufacture in India within three years, a condition Tesla has been advocated for. The team will focus on states like Maharashtra, Gujarat, and Tamil Nadu, known for their automotive industry presence.
Speaking of battery factories, Benchmark's satellite-based analysis indicates that since the IRA, North America has surpassed China in the timeline for constructing gigafactories.
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Stellantis CEO emphasizes the need for a 50% reduction in EV battery weight within the next decade to make electrification environmentally significant. Currently, an EV battery pack with a 400-kilometer range adds around 500 kilograms of extra raw materials compared to traditional cars.
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