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By Simon Moores, Co-Founder and Analyst at Benchmark Intelligence
Tesla Motors’ CEO Elon Musk has admitted the company is pursuing lithium deals in Nevada.
Tesla is looking to add to the conditional deal it struck with Bacanora Minerals / Rare Earth Minerals and Musk was forced to admit last night on Twitter that Nevada projects are being considered.
Last week’s lithium supply deal with Bacanora from its Sonora clay project in Mexico was the first Gigafactory raw material agreement to be announced, a situation that has gripped the junior mining sector since February 2014
The development surprised many sectors of the mining and investment industries, however. Not only because it is one of the newer lithium assets on the market but also with Tesla’s willingness to back the higher risk junior mining sector rather than striking a deal with an established producer.
But this discussion migrated into the realm of politics yesterday with an articlepublished by the Las Vegas Sun asking whether Elon Musk or the Nevada lawmakers were to blame for a Nevada-based lithium project not getting the green light.
Nevada is the only location in North America to mine lithium. Albemarle / Rockwood’s Silver Peak operation produces comparatively small amounts of lithium carbonate and lithium hydroxide to the rest of the world – the latter being the product needed by the Gigafactory.
In response to the article, Elon Musk took to Twitter to defend Tesla.
Politics Editor at the Las Vegas Sun, Scott Lucas, questioned whether Elon Musk “played” Nevada after the state gave Tesla $1.25m in tax breaks only for the company to turn to Mexico for its lithium.
Elon Musk responded by explaining that the deal with Bacanora was “not exclusive” and it was “definitely” correct to assume that Tesla is also going for Nevada sources of lithium. This confirmed Benchmark‘s expectation last week that the Bacanora deal is just the start of a series of Gigafactory raw material deals to be announced by Tesla.
Lucas Musk Twitter - Benchmark
Will politics influence Tesla’s next lithium call
There is no doubt that all major sources of lithium – both active and in development – have been considered by Tesla in its quest to secure the 25,000 tonnes of lithium hydroxide the Gigafactory will need at capacity. This is far more than any one producer can supply in today’s market and it will be needed as soon as 2020..