Tesla will buy nickel produced by the proposed Tamarack mine

Tesla has reportedly signed a deal worth $1.5 billion to purchase the nickel produced at the proposed Tamarack mine, located in Aitkin County, Minnesota.

According to Mining.com:

Under the terms of the deal, which Talon (TSX:TLO) said came after “extensive and detailed” due diligence and “lengthy negotiations,” Tesla will buy 75,000 tonnes (165 million pounds) of nickel over six years, with an option to increase the delivered tonnage.

Based on the ruling nickel price the deal is nominally worth more than $1.5 billion. Any iron and cobalt by-products at the proposed mine are also part of the deal. Tamarack is currently the only high-grade development-stage nickel project in the US and is a joint venture between Talon and Rio Tinto.

“The Talon team has taken an innovative approach to the discovery, development and production of battery materials, including to permanently store carbon as part of mine operations and the investigation of the novel extraction of battery materials,” said Drew Baglino, SVP of Powertrain and Energy Engineering at Tesla.

Talon’s deal represents the first time Telsa has contracted to purchase nickel directly from a U.S. supplier. Mining.com continues:

“This agreement is the start of an innovative partnership between Tesla and Talon for the responsible production of battery materials directly from the mine to the battery cathode. Talon is committed to meeting the highest standards of responsible production that is fully traceable and that has the lowest embedded CO2 footprint in the industry,” said Henri van Rooyen, CEO of Talon.

“Rio Tinto is working to support Talon to bring the Tamarack mine into production, as we strengthen our battery materials portfolio. We look forward to seeing it supply Tesla with nickel that is essential for the production of their electric vehicles,” said Rio Tinto Minerals Chief Executive Sinead Kaufman.

Talon needs to start commercial production at Tamarack by the end of 2025, which may be extended by the agreement of the parties for up to 12 months “following which Tesla has a right to terminate the agreement and Talon may elect to sell to other parties.”

Tesla’s agreement to purchase nickel from Minnesota is a promising start for the state’s emerging copper and nickel mining industries.

Unfortunately, the Tamarack mine will likely face fierce opposition from the same organizations that support Gov. Tim Walz’s California car mandates, which will require auto dealers to stock 14,000 new electric vehicles in the state every year.

These mandates are a bad policy because Minnesotans should be free to choose which vehicle type best suits their needs, but if EV advocates are primarily concerned about the environment, they should be supportive of mining in Minnesota because we have some of the strongest environmental protections on mining in the world.

Clearly, Tesla agrees.