With the increase in demand for electric cars, the price of nickel, copper, and cobalt, minerals used in the manufacture of batteries, rose.

Tesla owner Elon Musk has recently shown interest in entering the mining business, particularly for lithium extraction, in order to maintain the flow of the mineral needed in the manufacture of electric car batteries. According to the businessman, the price of the mineral is out of control and, therefore, the company would have to start mining and refining this metal. He completed by saying that lithium is found in almost all parts of the planet, therefore, the problem lies in the rate of extraction and refining of the mineral, which is very slow. Other minerals used in the manufacture of batteries are nickel, cobalt and copper.

Electric car market growth

The businessman's concern involves one of the essential minerals for the manufacture of electric cars. The same occurs with nickel, copper and cobalt, which are also key minerals in the production of electric cars. Elon Musk bets that the purchase of electric cars will expand exponentially in the coming years. Due to this, the businessman inaugurated two new Tesla factories, one in Berlin to serve the European market and one in Austin, Texas, to supply the United States. The factories called by the owner “gigafactories” are the size of 100 football fields and the capacity to double the company's production.

Tesla is not alone in exploring this new market: the Volkswagen announced that several of the company's electric cars are sold out by next year. In 2021, sales of electric vehicles by Volkswagen doubled. In addition, US President Joe Biden aims that by 2030, half of the country's vehicle fleet will be made up of electric cars.

These plans justify the concern regarding the minerals used in the battery manufacturing of electric cars. Lithium, a metal that has more than 80% of its destination for the manufacture of batteries, is traded today for around US$ 80.000 per ton, which means an increase of more than 400% in price in one year. Nickel, copper and cobalt are also on the rise, which was accentuated with the increase in oil prices and as a result of the Russian conflict with Ukraine.

Opportunities for Brazil

This rise brings opportunities for the Brazil, since the country has reserves and has already exploited these minerals at some point. Brazil has the third largest nickel reserve in the world, after Indonesia and Australia. Currently, the country has modest extraction rates, and much of the mineral extraction today takes place in a municipality in Goiás, called Niquelândia, where there are also cobalt deposits.

Vale, the largest mining company in the country, is also a producer of nickel and cobalt in the mines belonging to its subsidiary in Canada, as well as copper in Pará. Currently, around 5% of the high purity nickel produced by the mining company is used in the manufacture of electric car batteries, but the goal is to increase this share to 30% to 40%. Tesla reached a secret clauses agreement with Vale.

According to Itaú BBA mining analyst Daniel Sasson, “The agreement between Tesla and Vale is much more strategic than commercial. It makes sense for companies that will be big consumers of nickel in the future to make deals to secure that supply.”

In 2022, the price of nickel surpassed the mark of US$ 100.000 per ton, almost double the historical maximum in 15 years, which forced the London Metal Exchange to suspend negotiations. After that, the price settled down and nickel is trading at around $32.500.

Vale, which was among the top three nickel producers in the world until 2020, is currently the largest in the market. According to Veja magazine, in 2021 the company produced 168 thousand tons of nickel and the estimate for 2022 is up to 190 thousand tons of nickel and 355 thousand tons of copper.