MIAMI, FLORIDA - A Tesla vehicle is charged in a parking lot on October 21, 2021 in Miami, Florida.
(Photo : Joe Raedle/Getty Images)
Mozambique has positioned itself as a key figure in the electric vehicle wars, with the Southern African country set to provide Tesla an essential component in its car batteries. The world's top electric car maker signed a deal last month with Australia's Syrah Resources, which operates one of the world's largest graphite mines in Balama, Mozambique. Analysts believe this agreement will help Tesla reduce its dependence on China for graphite.
Tesla nabs major deal with Syrah Resources
Graphite is a mineral that is a critical component in developing lithium-ion batteries. Syrah Resources possesses that all-important material, processing the graphite from its mine in Mozambique at its plant in Vidalia, Louisiana.
Tesla wants that graphite badly, with the Austin, Texas-based automaker planning to buy up to 80 percent of the Louisiana plant's production starting in 2025. Syrah Resources generates around 8,000 tons of graphite per year. For the deal to commence, Syrah Resources must prove that the graphite meets the standards of Tesla.
According to Simon Moores of Benchmark Mineral Intelligence, a UK-based battery materials data and intelligence provider, Tesla's deal with Syrah is part of the company's plan to make its own batteries in the future and, in the process, reduce its dependence on China, which is the undisputed global leader in graphite production.
Moores said in an interview with the Associated Press that the deal is all about geopolitics at this point. He said that the United States wants to build enough capacity domestically to build lithium-ion batteries within the country. This deal will help Tesla source graphite independently from China.
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Tesla looking to reduce dependence on China
According to Moores, producing the batteries in the United States also has an added benefit for Tesla, as this will reduce the questions the company is facing regarding its ties with China. Tesla has invited criticism after setting up a showroom in the Chinese region of Xinjiang.
Authorities in this area have been accused of human rights abuses against Muslim ethnic minorities, with forced labor one of the main issues. Environmental concerns have also been raised at some Chinese mines where graphite is mined.
There has been a short supply of graphite in recent months, hampering the battery industry as a result. This makes Tesla's deal with Syrah a major catch for Elon Musk's company. Graphite is important because it is the primary material used for the anode in lithium-ion batteries.
Demand remains very high for electric vehicles, with Tesla making almost a million cars per year. Tesla's biggest constraint, however, is expanding its fleet is the sourcing of batteries. Having this deal with Syrah will help Tesla increase its battery manufacturing capacity.
Tesla is building a new battery factory in its headquarters in Austin, Texas, helping the company move ever closer to self-sufficiency. Moores believes, however, that Tesla will continue to buy batteries from other manufacturers in the coming decade because of the scarce raw materials.
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