How Tesla Is Opening Their Own Mining Operation!

Summary

Tesla is advancing its vertical integration by controlling resource extraction, specifically mining nickel for their 4680 battery cells. The company is focusing on New Caledonia, home to a quarter of the world's nickel reserves, to ensure environmentally and socially responsible mining practices. Tesla's direct involvement aims to address sustainability concerns like biodiversity impact and human rights, setting a precedent in the electric vehicle industry. This move could significantly impact production costs and sustainability in EV battery manufacturing.

Takeaways

• 🚀 Tesla is taking control of their own resource extraction, including mining operations for metals like nickel, which are crucial for their battery production.
• 🔋 The 4680 battery cell, with its high nickel content, is a significant focus for Tesla as they plan to manufacture these large cells in increasing quantities.
• 🌱 Tesla aims for vertical integration, managing the entire process from raw material extraction to final product assembly, emphasizing sustainability and environmental protection.
• 🏝️ New Caledonia, with one of the world's largest nickel reserves, is central to Tesla's mining operations, particularly the Goro mine at the island's southern tip.
• 🤝 Tesla's direct engagement with the Goro mine allows them to address sustainability issues such as biodiversity impact, energy consumption, human rights, and tailings management.
• 📉 New Caledonia's history with nickel mining is fraught with environmental and social issues, but the territory is now positioning itself as a supplier of high-grade nickel for electric vehicle batteries.
• 👷‍♂️ Prony Resources, the current owner of the Goro mine, is committed to reducing carbon emissions and becoming carbon neutral, aligning with Tesla's sustainability goals.
• 🌿 The Goro mine's operations have been a source of conflict due to environmental concerns and political tensions, but Tesla's involvement is seen as an opportunity to improve conditions.
• 🌐 Tesla's direct sourcing of raw materials like nickel and lithium is a strategic move that could give them a competitive advantage in the electric vehicle market.
• 💰 By controlling the supply chain and manufacturing processes, Tesla can potentially reduce production costs and make electric cars more affordable.

Q & A

Why is Tesla getting involved in resource extraction?

Tesla is getting involved in resource extraction to take control of their supply chain and ensure the minerals used in their products are mined in an environmentally and socially responsible way.

What is the significance of the 4680 battery cell for Tesla?

The 4680 battery cell is significant for Tesla as it is a large, high-nickel content cell that the company plans to manufacture in large quantities, requiring a substantial amount of nickel.

Why is vertical integration important for Tesla?

Vertical integration is important for Tesla as it allows the company to manage their own materials, components, and software from the ground up, ensuring quality and sustainability throughout the production process.

Where is Tesla's nickel mine located?

Tesla's nickel mine is located on the island of New Caledonia in the South Pacific, specifically in an area called Goro at the southern tip of the island.

What percentage of the world's nickel reserve does New Caledonia hold?

New Caledonia holds one quarter of the world's nickel reserve.

How does Tesla plan to address sustainability issues in mining?

Tesla plans to address sustainability issues by working directly with mines, addressing concerns such as biodiversity impact, energy consumption, human rights, and tailings management.

What is the historical context of nickel mining in New Caledonia?

Nickel mining in New Caledonia began in the 1850s using slave labor. The island's history is marked by French colonialism and exploitation, with a transition to more regulated and environmentally conscious practices over time.

What are the environmental and social challenges faced by the nickel mining industry in New Caledonia?

The nickel mining industry in New Caledonia faces challenges such as high production costs, environmental degradation, and social unrest due to concerns over land rights and the impact on indigenous communities.

What is Prony Resources' commitment to sustainability?

Prony Resources, the current owner of the Goro mine, promises to reduce its carbon emissions by 2030 and become carbon neutral within ten years after that. They also plan to transform waste management and replace dirty coal with solar panels.

How does Tesla's deal with Prony Resources impact the local community in New Caledonia?

Tesla's deal with Prony Resources is seen as a positive step by local leaders as it is expected to force Goro to adhere to high standards of environmental and social responsibility, potentially improving employment opportunities for the local Kanak community.

What competitive advantage does Tesla gain by sourcing raw battery materials directly from the mine?

By sourcing raw battery materials directly from the mine, Tesla gains a competitive advantage by eliminating middlemen, ensuring materials meet Tesla's standards, and having complete control over production costs and margins.

Outlines

00:00

🔋 Tesla's Vertical Integration into Nickel Mining

Tesla is taking control of its resource extraction by running mining operations to source metals like nickel, crucial for manufacturing their products. The company is focusing on materials for the 4680 battery cell, which will see a significant increase in production over the next few years. Tesla's approach to vertical integration extends to the extraction and refining of metals, aiming for sustainable and environmentally friendly practices. A recent New York Times article has shed light on Tesla's mining endeavors on the island of New Caledonia, where the company is working to ensure the responsible extraction of nickel, the largest reserve on Earth. Tesla's efforts aim to address sustainability issues such as biodiversity impact, energy consumption, human rights, and tailings management.

05:00

🌍 New Caledonia: Tesla's Nickel Mining Venture

Tesla's nickel mine is located in New Caledonia, an island with the world's largest nickel reserve. The island, still a French territory, has a history of colonialism and environmental challenges due to nickel mining. Despite being a European nation with high production costs, New Caledonia is positioning itself as a supplier of high-grade nickel for electric vehicle batteries. The government, led by a coalition including indigenous peoples, is committed to protecting human rights and the environment. Tesla's deal with Prony Resources, the current owners of the Goro mine, is seen as an opportunity to uphold high standards of safety and sustainability. The deal is expected to help employ local populations and adhere to Tesla's sustainability mission.

10:01

🚀 Tesla's Pioneering Approach to Sustainable Mining

Tesla's deal with Prony Resources is a significant step towards sustainable mining practices. The company is committed to reducing carbon emissions and achieving carbon neutrality at the Goro mine. Despite past challenges, including protests and environmental concerns, Tesla's involvement is seen as a potential catalyst for positive change. The agreement is expected to improve working conditions and environmental standards, aligning with Tesla's mission to lead the electric vehicle revolution with the highest quality materials sourced responsibly. This approach positions Tesla as a pioneer in the industry, setting a precedent for other automakers to follow in controlling their supply chains and ensuring sustainable practices from raw material extraction to manufacturing.

Keywords

💡4680 battery cell

The 4680 battery cell is a significant innovation by Tesla, representing a larger, higher-capacity battery cell designed to increase energy density and reduce costs. It is a key component in Tesla's electric vehicles, particularly for models like the Cybertruck. The 4680 cell is believed to have a capacity of about 26 Ah and is roughly 100 Wh, which is a substantial increase over previous cell formats. This advancement is crucial for Tesla's goal to ramp up battery production and vehicle manufacturing, as indicated by the company's announcement of producing its 20 millionth 4680 cell at Gigafactory Texas, signifying a production rate that could support over 1,000 cars a week [^17^].

💡Vertical integration

Vertical integration in the context of Tesla refers to the company's strategy to control every aspect of the production process, from the extraction of raw materials to the manufacturing of components and the assembly of the final product. This approach allows Tesla to have greater control over quality, costs, and innovation. The script mentions that Tesla prefers to operate with vertical integration, which is evident in their direct involvement in mining operations to source metals like nickel, a critical component in battery production [^1^].

💡Nickel

Nickel is a key metal used in the production of lithium-ion batteries, particularly for the high-nickel content cells like Tesla's 4680 battery. It is important for Tesla to secure a reliable and sustainable supply of nickel to manufacture their batteries at scale. The script discusses Tesla's efforts to control their resource extraction, including running mining operations to produce the necessary metals like nickel [^1^].

💡New Caledonia

New Caledonia is an island in the South Pacific where Tesla is focusing on nickel mining operations. The island holds one quarter of the world's nickel reserves, making it a strategically important location for Tesla's supply chain. The script highlights Tesla's involvement in the Goro nickel mine in New Caledonia, which is the largest nickel mine on the island, and the company's efforts to ensure environmentally and socially responsible mining practices [^1^].

💡Sustainability

Sustainability in the script refers to Tesla's commitment to operating in an environmentally and socially responsible manner. This includes their efforts to reduce the environmental impact of mining operations, such as those in New Caledonia, and to ensure that the minerals used in their batteries are sourced ethically. Tesla's sustainability report mentions addressing issues like biodiversity impact, energy consumption, human rights, and tailings management in their mining operations [^1^].

💡Goro nickel mine

The Goro nickel mine is located in New Caledonia and is the largest mine on the island, which holds a significant portion of the world's nickel reserves. Tesla has secured a deal to purchase a substantial amount of nickel from this mine to support their battery production. The script discusses the challenges and history of the mine, including protests and environmental concerns, as well as Tesla's efforts to ensure the mining is done in a sustainable and responsible way [^1^].

💡Cobalt

Cobalt is another critical metal used in the production of lithium-ion batteries, particularly in the cathodes of high-energy density cells. Tesla is actively working on reducing the amount of cobalt in their batteries while maintaining performance, as part of their commitment to sustainability and responsible sourcing. The script does not explicitly mention cobalt, but it is implied in the broader discussion of battery materials and Tesla's sourcing strategies [^1^].

💡Lithium

Lithium is a primary material used in lithium-ion batteries, which are the power source for Tesla's electric vehicles. Tesla is committed to securing lithium through responsible mining practices and has direct relationships with lithium suppliers. The script does not directly mention lithium, but it is an essential part of the battery technology discussed and Tesla's vertical integration strategy [^1^].

💡Prony Resources

Prony Resources is a consortium majority owned by New Caledonian interests, including the provincial government, mine workers, and local community members. They are the current owners of the Goro nickel mine and have committed to reducing carbon emissions and becoming carbon neutral. Tesla's deal with Prony Resources is seen as a way to ensure that the nickel used in their batteries is sourced responsibly and sustainably [^1^].

💡Environmental protection

Environmental protection is a key aspect of Tesla's mission, extending to their mining operations. The company aims to minimize the environmental impact of extracting the metals needed for their batteries, such as nickel from the Goro mine. This includes efforts to reduce carbon emissions, manage waste responsibly, and protect biodiversity in areas where they operate [^1^].

Highlights

Tesla is taking control of their own resource extraction by running mining operations for metals like nickel.

Tesla is focusing on materials to make the 4680 battery cell, which requires a large amount of nickel.

Tesla prefers vertical integration, managing their own materials and components from the ground up.

New Caledonia holds one quarter of the world's nickel reserve, and Tesla is interested in its sustainable mining.

Tesla aims to ensure minerals used in their cells are mined in an environmentally and socially responsible way.

Elon Musk secured a deal for Tesla to directly purchase up to one third of Goro's nickel production.

Tesla's sustainability report highlights the company's commitment to addressing issues like biodiversity impact and human rights.

New Caledonia, a French territory, has a history of colonialism and environmental challenges due to nickel mining.

The island is now positioning itself as a supplier of high-grade nickel for rechargeable batteries.

Prony Resources, the current owners of the Goro mine,承诺到2030年减少碳排放并在未来十年内实现碳中和。

The Tesla deal with Prony Resources was welcomed by local leaders for its promise of high standards.

Tesla's direct involvement in mining is a significant move towards vertical integration and sustainability in EV battery production.

Tesla's approach to nickel mining in New Caledonia is part of a broader strategy to control their supply chain.

The Goro mine has a history of conflict and environmental issues, which Tesla aims to address with its involvement.

Tesla's ownership of a lithium deposit in Nevada indicates a long-term strategy for vertical integration of battery materials.

Tesla's control over their product, production costs, and margins is a key factor in reducing the price of electric cars.

Transcripts

here's something that we don't talk

about very often how tesla is taking

control of their own resource extraction

and by that we mean actually running the

mining operations that produce the

metals like nickel that the company

requires to build their products

in today's case we are going to be

focusing specifically on materials to

make the 4680 battery sell we know that

tesla is going to be ramping up their

capacity to manufacture these very large

high nickel content cells and over the

next couple of years they're going to

start spinning out multiple terawatt

hours worth of battery capacity annually

that is a lot of batteries and that

means a lot of nickel is going to be

used we also know that tesla prefers to

operate their company with vertical

integration that means from the ground

up the company takes charge of their own

materials and components and software

that go into their product and when we

look at the 4680 cell as a product that

vertical stack extends down all the way

into the literal ground where the metals

are extracted and refined we've known

for a while now that tesla is getting

into the mining industry but a recent

article from the new york times in their

race to the future series has opened up

a ton of new details on just what tesla

is up to on the island of new caledonia

in the south pacific

and how the company is trying to expand

their mission of sustainability and

environmental protection to mining the

largest nickel reserve on planet earth

it is really interesting stuff i promise

so let's get going

so first off all credit is due to the

new york times for putting in the work

to flesh out this story it's a good read

but it is also very long and behind a

paywall and the times didn't do a very

good job of promoting the story so no

one seems to be talking about it

hopefully they don't sue me for

borrowing their information

nobody tell the new york times about

this anyways the location of tesla's

nickel mine is new caledonia it's an

island that lies in between australia

and fiji and more specifically we are

talking about an area at the southern

tip of the island called goro

this is the largest nickel mine on new

caledonia an island that holds one

quarter of the world's nickel reserve

that is very important to remember this

little sliver in the pacific ocean may

hold up to

one quarter of all the nickel that is

available to be mined on the planet

tesla wants to use this opportunity to

take control of their supply chain and

ensure the minerals used in their cells

are mined in both an environmentally and

socially responsible way this is the

largest effort by a western electric

vehicle maker to directly source mineral

assets of course we know that this is

one of the great paradoxes for electric

cars by choosing to drive an ev instead

of a gasoline vehicle we are reducing

our own personal carbon emissions by a

huge margin it's a clean sustainable

method for transportation

but

the process of extracting the

ingredients that make up that electric

car is basically the exact opposite it's

dirty environmentally destructive and

politically fraught because of the

nickel mining industry in new caledonia

the island has become one of the world's

largest carbon emitters per capita but

it doesn't have to be that way or at

least tesla doesn't think so and that's

what the company is going to be trying

to prove as they tackle this new venture

elon musk secured a deal in october 2021

to directly purchase up to one third of

goro's nickel production over the next

five years in their sustainability

report on the goro mining project tesla

writes that by working directly with a

mine rather than buying nickel from a

middleman the company could quote

address sustainability issues such as

biodiversity impact energy consumption

human rights and tailings management

tesla works directly with mineral

producers and refiners that are aligned

with our mission and are committed to

supplying sustainably and responsibly

sourced materials the report said if

there is anywhere in the world that

tesla can pull this off new caledonia is

probably the place

but it won't come easy there is a lot of

bad history that they need to get past

first new caledonia itself is currently

still a french territory though it was

actually named by the explorer james

cook who first spotted the land in 1774

and thought it looked like scotland

there are dozens of small islands that

make up the territory but we are just

focusing on the primary island known as

clantea that basically just means big

land in french

new caledonia is the product of french

colonialism which is something the

nation was really into throughout the

late 19th century they'd basically just

sail around the world landing in new

places and declaring that they were now

the property of france to which the

locals of that place would be like i

don't know what you're saying please

leave but the french would not leave

instead they would enslave the local

population and commit terrible acts of

human cruelty for decades to come it was

bad and it wasn't just the french that

were doing this anyways skipping ahead

to present day now with a population of

270 000 people new caledonia remains a

french overseas territory which means it

is actually a european nation and

accordingly is bound by rigorous

european environmental and labor

standards things have come a long way

since nickel mining began on the island

using slave labor in the 1850s

other major nickel producers like

indonesia and the philippines have

comparatively loose regulations and even

looser oversight which means they can

produce nickel far more cheaply than new

caledonia and to compete against these

low-cost rivals new caledonia is now

positioning itself as a supplier of top

grade nickel for rechargeable batteries

rather than the cheaper product that is

mostly used for stainless steel this

gives new caledonia a unique opportunity

to lead the way in setting global

standards for the electric vehicle

revolution if companies want the best

quality nickel and therefore the most

energy dense battery cells then they

need to buy it the right way the current

government of new caledonia is led by a

coalition representing the indigenous

peoples known as canex alongside

generations of european settlers and

newer french rivals as well as asians

and pacific islanders who came to work

the mines the government is also eager

to protect local rights

in an interview the nation's president

luis mapu said quote new caledonia in

its way of exploiting its ore is

perceived as a country which contributes

to the fight against global warming we

have very high production costs in new

caledonia it is true but we respect

human rights respect the rights of local

people and respect the environment okay

now that we have our setting fleshed out

we can get into the actual mining

business that tesla is involved in here

because that's not a simple story either

obviously tesla is not the first to come

to this area with high hopes for

securing unlimited supplies of resources

some of the world's biggest nickel

miners have tried to profit at goro and

failed goro's previous owner the

brazilian mining giant vale was actually

desperate to rid itself of the mine

tensions over who would buy the nickel

processing plant led to protests that

forced goro to shut down for months the

conflict even triggered the fall of new

caledonia's government in early 2021

that led to the existing coalition

government under president mapu the

first kanek leader of the nation who

said in an interview quote in the

history of nickel in new caledonia a

battle exists between the multinational

and the local populations with tesla

with the new ownership we have a

compromise now that makes it possible to

open the goro plant but it remains

fragile and uh by fragile he means the

kanak workers and villagers have set the

goro mining facility on fire twice in

the past decade the road to the mine is

still littered with the remains of burnt

cars and tires from the uprising in late

2020 and early 2021

local opposition to the mind draws both

from political concerns and

environmental fears and that brings us

up to the mines current owners proney

resources this is a consortium that is

majority owned by new caledonian

interests including the provincial

government mine workers and local

members of the community proney

resources is promising to have its

carbon emissions by 2030 and become

carbon neutral 10 years after that waste

from the plant which is currently held

in a tailings dam as a toxic sludge will

be filtered and transformed into a less

corrosive dry waste the dirty coal that

powers the processing plant will be

replaced by a large collection of solar

panels according to prony executives

dennis lustilet the chief sustainability

officer for prony resources said in an

interview clearly we had work to do to

show that safety and sustainability are

our top priorities

even one small accident is too much

as proney resources sees it the mine is

helping employ canx who might otherwise

struggle to find jobs about 40 percent

of kanek youth are unemployed even

though canex can attend university in

france few indigenous people have

advanced degrees and that's not to say

everything is on equal ground the racial

divide agoro is apparent the head of

prone resources is white and grew up in

france and most of the mines top

managers are also white the drivers and

laborers are mainly canik the tesla deal

with prony announced in october 2021 was

greeted with jubilation by kanek

political leaders who say that it will

force goro to adhere to the high

standards promised to them rock

whammytan the president of new

caledonia's congress said in an

interview now we can sleep tranquilly

because we know the whole world is

watching to make sure that we take green

nickel seriously he added the tesla deal

made that happen though there is still a

long way to go before nickel extraction

can be seen as anything even resembling

a green and sustainable process

goro still depends on an inherently

dangerous process to produce nickel the

conjoining of acid and slurry at great

heat and pressure first giant excavators

loaders and trucks running on fossil

fuels need to scoop up the earth and

carry it away then the soil slurry is

fed into a coal-fired facility that uses

high-pressure blasts of sulfuric acid at

high temperature to extract nickel and

cobalt but the competitive advantage

that tesla stands to gain here is pretty

remarkable no other automaker is

anywhere near being able to manufacture

their own cells in the house let alone

being set up to source their own raw

battery materials straight from the mine

don't forget that tesla owns a lithium

deposit in nevada that they haven't even

started to exploit yet we're going to

see a lot more of this kind of business

approach over the years to come as tesla

continues to grow and gains even more

money and resources to throw around no

middlemen involved every material coming

straight from the source according to

tesla standards and every component

manufactured in-house by tesla or tesla

subsidiaries

complete control over their product

their production costs and their margins

when we talk about getting the price

down for lithium-ion batteries and

electric cars on the whole

this is how we do it this is the only

way to do it and that's why tesla are

the leaders hopefully you all learned

something today let us know your

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