(Bloomberg) -- Elon Musk has a plea for mining companies: “Please mine more nickel.”
“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” said Musk, chief executive officer of the electric-carmaker, during a second-quarter earnings call.
Musk’s plea comes as one of Japan’s general trading giants is about to take a roughly $500 million writedown on a nickel project in Madagascar because of low prices and the coronavirus pandemic.
Supplies of battery-grade nickel -- a key component in the cathode of an electric vehicle’s battery -- could run short as early as 2023. BloombergNEF expects a tight balance in the next two to three years as lithium-ion battery demand picks up.
Already, Ambatovy -- one of the world’s largest nickel projects, with full operational capacity representing 5% of class 1 nickel global production capacity -- hasn’t resumed operations after being suspended in March 2020. An extended suspension will exacerbate the potential tightness in the nickel market.
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