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March 28, 2014

Tesla to Use North American Material Amid Pollution Worry

THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
- FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY -


Bloomberg News - March 28, 2014

Tesla to Use North American Material Amid Pollution Worry

Tesla Motors Inc. (TSLA), the electric vehicle maker co-founded by Elon Musk, plans to source all the raw materials for its proposed $5 billion U.S. battery factory in North America.

The Silicon Valley company won’t look overseas for the graphite, cobalt and other materials needed for its so-called Gigafactory, said Liz Jarvis-Shean, a spokeswoman.

“It will enable us to establish a supply chain that is local and focused on minimizing environmental impact while significantly reducing battery cost,” she said in an e-mail.

The move comes amid heightened interest in curbing graphite pollution and a widespread corporate sensitivity about avoiding the use of industrial minerals from troubled parts of the world. China’s government, for example, has begun to shutter mines producing graphite, a major ingredient in lithium-ion batteries, over air-quality issues, Bloomberg News reported March 14.

Tesla, which manufactures the $71,070 Model S, says the “vast majority” of the graphite it uses right now comes from Japan and Europe and is synthetic, not mined. The Palo Alto, California-based company prefers the synthetic variety, Jarvis-Shean said.

Natural graphite mined in China accounts for most of the material used in batteries worldwide, according to London-based Industrial Minerals Data. China, the biggest graphite producer, is closing dozens of mines and processing plants even as global demand soars.

High Costs?

The Tesla purchasing strategy is unique in the battery industry, according to Sam Jaffe, an analyst at Navigant Research. To make it work, analysts who follow the industry say Tesla may need to turn to graphite mines in Canada that have yet to be built. For cobalt, they say Tesla may have to go beyond existing Canadian output and look at prospective supplies in Minnesota and Idaho.

Formation Metals Management note: Formation Metals and the Idaho Cobalt Project is mentioned later in the article. Read the full article here: Tesla to Use North American Material Amid Pollution Worry

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