AUSTIN, TEXAS: In a first-of-its-kind deal aimed at reducing its dependence on China for graphite, Tesla is turning to Mozambique for a key mineral used in lithium-ion electric car batteries.
The company, owned by Elon Musk, signed an agreement last month with Australian company Syrah Resources, which operates one of the world's largest graphite mines in Balama, Mozambique. The value of the deal has not been disclosed.
Austin, Texas-based Tesla will buy the mineral from Syrah's processing plant in Vidalia, Louisiana, which sources graphite from its mine in Mozambique, in southeastern Africa.
According to the agreement, beginning in 2025 Tesla plans to purchase some 80 percent of what the plant produces, or 8,000 tons of graphite per year.
Simon Moores of UK-based battery materials data and intelligence provider, Benchmark Mineral Intelligence, said Tesla's plan to increase its capacity to manufacture its own batteries is aimed at reducing its dependence on China, which dominates international graphite markets.
"It starts at the top with geopolitics. The U.S. wants to build enough capacity domestically to be able to build lithium-ion batteries. And this deal will permit Tesla to source graphite, independent from China," he added.
The battery industry has faced a short supply of graphite in recent months, which stores lithium inside a battery until it is needed to generate electricity by splitting into charged ions and electrons, Moores noted, adding that Tesla makes almost one million electric cars per year, so sourcing enough batteries remains a major constraint.
"They have upped their own battery manufacturing capacity, but still they cannot get enough batteries," he said, as reported by USA Today.
A new battery factory in its hometown of Austin will enable Tesla to approach self-sufficiency, though it is now buying batteries from other manufacturers and that will not change during this decade, Moores explained.
Sam Abuelsamid, principal e-mobility analyst for Guidehouse Insights, said Tesla's agreement with Syrah is part of the wider efforts of automakers to secure relatively scarce raw materials for batteries, as demand for electric vehicles is expected to increase.
It is unlikely that the Chinese government will react negatively to the deal, as China has plenty of markets for its graphite, including increased domestic electric vehicle production, Abuelsamid added.
However, the deal is "crucial" for Syrah because it has a non-Chinese purchaser for its graphite product, Moores told USA Today.