Electric vehicles giant Tesla Inc (NASDAQ:TSLA) held talks with the FTSE 100 listed Glencore PLC (LSE:GLEN) about taking a stake in the mining and commodities group, according to a report.
Citing sources familiar with the matter, the Financial Times said Tesla discussed buying 10% to 20% of Glencore last year and continued negotiations in March this year, when the Swiss firm’s chief executive Gary Nagle visited the carmaker’s factory in Fremont, California.
Talks concluded without an agreement due to Tesla’s concerns about Glencore’s coal mining business and its impact on the environment, the sources told the paper.
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Michael Hewson, chief market analyst at CMC Markets, said: “the growing popularity of electric cars is likely to mean that automakers will want to secure sources of lithium and cobalt so what better way than to sign a deal with a producer who has expertise in that area.”
Indeed the talks should come as little surprise with the expected electric vehicles (EV) boom likely to hinge on the availability of critical raw materials such as copper, nickel, lithium, aluminium, and cobalt.
Tesla and Glencore already have a deal in place which guarantees Tesla cobalt supply for its plants in China and Germany with Glencore being the world’s top producer of cobalt.
Pacts with other producers of battery metals, such as lithium, cobalt and nickel, are also in place with deals struck to supply nickel with BHP PLC and Vale together with agreements with Prony Resources in New Caledonia and Talon Metals for its Tamarack nickel project in Minnesota.
Tesla’s owner Elon Musk has been open about buying a mining company and has also advanced plans to build his own lithium hydroxide refinery in Texas, as Musk considers refining ore a “licence to print money.”
Other carmakers have invested in metals mining start-ups, but none have taken a major stake in a legacy mining giant so far.
For example, Stellantis became this year the second-largest shareholder in Vulcan Energy Resources (ASX:VUL), a start-up lithium producer that is aiming to become the world’s first lithium producer with net-zero greenhouse gas emissions.
Shares in Tesla were up 0.22% at $229.03.
Contact Jeremy @ jeremy@proactiveinvestors.com