Mine in Mozambique will reduce dependence on China
As companies the world over look to move supply chains out of China, Tesla has found a new source for one of its most important raw materials. The electric car manufacturer has signed a deal with Syrah Resources, an Australian mineral and tech company with a large graphite mine in Mozambique.
Graphite is a critical component of lithium-ion batteries, and Tesla has agreed to buy up to 80% of the production from Syrah Resources’ plant in Vidalia, La., which processes graphite from the mine in Balama, Mozambique. The contract begins in 2025 and will supply as much as 8,000 tons of graphite to Tesla annually.
“It starts at the top with geopolitics,” Simon Moores of U.K.-based Benchmark Mineral Intelligence told the Associate Press. “The U.S. wants to build enough capacity domestically to be able to build (lithium-ion batteries) within the USA. And this deal will permit Tesla to source graphite independent from China.”
China remains Tesla largest market, and it sells more cars there than it does in the U.S., but tight COVID restrictions over the last two years have severely hampered supply chains that rely on raw materials and cheap labor in China.
“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,” Donald Sadoway, a professor of materials chemistry at the Massachusetts Institute of Technology, told the AP. “Somebody could all of the sudden say, ‘We’re going to jack up the prices,’ or ‘We’re going to refuse to ship it.'”
The mine in Mozambique’s Cabo Delgado province can produce 350,000 tons of flake graphite per year, but the area has been beset by violence from Islamic extremists in recent years.