March 10, 2016
Tesla's Supply Chain -- Triumph of Hope over Experience?
Publisher: Investor Intel
Author: Christopher Ecclestone
They say that second marriages are the triumph of hope over experience but we can't help thinking the same of Tesla's "belief" that when miners said to it that they would be able to provide enough Lithium, Cobalt and Graphite for its Gigafactory it actually believed them. We can't escape the feeling that the texting acronym ROFL (Rolling On the Floor Laughing) was made for exactly this situation.
[NOTE: The following paragraphs are excerpts from the full article. To read the full report, Click here]
In this piece we shall follow on from the firestorm that John Peterson created in his piece last week with a specific look at how credible the chance of any of the many projects in the three metals of import actually becoming productive was over the last five years.
This metal has until recently been one of the least talked about in the battery supply chain probably because it has an LME quoted price and thus this has given many the illusion that it is a "major trade metal". Wrong! To put this in perspective the LME warehouses only have 614 tonnes of this metal in stock. Not exactly a base on which to build a major battery industry and still get a good night's sleep.
This brings us then to the subject of primary Cobalt mines. These are rare unicorns indeed.
Formation Metals (FCO.to) is the obvious candidate for Tesla to "take out" if Tesla starts getting serious but even then, the project would probably not fully supply Tesla's needs. Then it might need to move on to the NiCoCo project of Fortune Minerals (FT.to) to be fully self-sufficient. The others are all too early stage or too small to be realistic help in ameliorating Tesla's looming Cobalt crunch.
To read more, Click here for the full article