Tesla is selling more cars than ever. These are the ASX stocks in bed with it
Tesla is on the charge, delivering a record number of EVs globally over the past three months. And these ASX mineral producers are along for the ride.
Tesla, the world’s largest EV manufacturer, has once again shattered expectations with its delivery of a record 466,140 cars worldwide between April and June, exceeding estimates by Wall Street analysts.
That’s a lot of cars, and as we all know, electric vehicles need a bucketload of minerals – not just lithium – to help power them.
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A 60-kilowatt hour (kWh) battery contains roughly 185kg of minerals, excluding materials used in the electrolyte, binder, separator, and battery pack casing.
According to experts, the cathode is not only the most expensive component of the battery, but it also holds the widest variety of minerals – the different combination of minerals give rise to the many different battery characteristics.
Below is the breakdown of the amounts contained in the average 2020 battery, courtesy of The Visual Capitalist.
Around 52kg of graphite is used for the anode (28.1 per cent of the battery) meaning by weight, it is the largest component in lithium-ion batteries.
In fact, lithium-ion batteries contain about 10-15 times more graphite than lithium, which explains why Tesla has locked in a deal with ASX listed graphite developer Magnis Energy (ASX:MNS) for the supply of a minimum 17,500tpa of active anode material (AAM) beginning in February 2025 for a minimum three years with fixed pricing.
To fulfil a key condition of the with, Magnis secured a site for its commercial AAM facility in the southwest of the US – chosen from a shortlist, which also included candidates in the Midwest and Southeast regions. All have undergone an advanced review.
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Proximity to logistics and key off-takers have been key considerations for these sites, which have completed evaluations for size, power, and infrastructure requirements, along with expansion possibilities, Magnis said.
In an interview with Stockhead, Magnis group communications manager Con Hoursalas said work would begin immediately on completing a demonstration plant and, in parallel, starting the process to hire key personnel and staff.
“Magnis understands the scale of the green energy transition and that it is going to be a challenging effort requiring the collaboration of all stakeholders,” he said.
“Nobody could achieve all this alone.
“We’re proud of what we’ve achieved to date but we also acknowledge that it’s a global objective and therefore success hinges on the involvement of both government entities and established commercial players,” Hoursalas added.
“And we’re already seeing this with the IRA (Inflation Reduction Act) in the US and the nascent National Battery Strategy here in Australia.”
NOW READ: Magnis ups stake in iM3NY Battery Plant
Other ASX stocks with Tesla deals
SYRAH RESOURCES (ASX:SYR)
In December, 2021, Syrah executed its offtake agreement with Tesla to supply natural graphite AAM from the 11.25ktpa AAM facility in Vidalia, Louisiana.
It has now finalised AAM specifications in this offtake agreement.
Further to the 8000tpa AAM offtake obligation, Tesla exercised an option in December 2022 to offtake an additional 17ktpa AAM from Vidalia at a fixed price and for an initial term of at least four years, subject to the further expansion of Vidalia’s production capacity to 45,000tpa.
Tesla’s offtake obligation is a key customer commitment for a final investment decision (FID) on the Vidalia Further Expansion project, accounting for a combined 56 per cent of the planned production capacity.
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LIONTOWN RESOURCES (ASX:LTR)
From 2024, Liontown will supply Tesla 100,000 dry metric tonnes (DMT) of spodumene concentrate from the Kathleen Valley project in WA in the first 12 months, increasing to 150,000 DMT per year for the remaining five-year term.
The offtake deal represents about one-third of the project’s start up spodumene concentrate production capacity of around 500ktpa.
Liontown also has a deal with Ford which includes the annual supply of up to 150,000 DMT of spodumene for five years once its Kathleen Valley lithium mine kicks off production in 2024.
A $300 million debt facility was also agreed upon for the mine from a Ford unit to further develop the project.
Liontown’s chair, and managing director and CEO undertook a market engagement visit to the US in February.
The visit included senior level discussions with Ford and Tesla, and tours of their respective manufacturing facilities, plus engagements with senior bureaucrats and policy makers in Washington DC.
BHP GROUP (ASX:BHP)
BHP’s deal with Tesla started in 2022 for the supply of up to 18,000 tonnes of class 1 nickel per year from the Nickel West asset and processed at the company’s new nickel sulphate plant in Kwinana, WA, which is expected to produce 100,000 tonnes a year when fully operational.
The two companies will also collaborate on ways to make the battery supply chain more sustainable.
With Ford, BHP has entered into an MOU for nickel supply, which could start as early as 2025 and may involve additional commodities over time.
The company has also inked a deal to supply nickel sulphate to a battery-making joint venture between Toyota Motors and Panasonic – dubbed Prime Planet Energy & Solutions (PPES).
RIO TINTO (ASX:RIO)
Rio Tinto and joint venture partner Talon Metals Corp will supply Tesla with 75,000 tonnes of nickel concentrate over a six-year period from the Tamarack project in Minnesota.
Under the agreement, Tesla holds the right to negotiate the purchase of nickel concentrate in excess of the initial commitment of 75,000 tonnes.
RIO also will supply Ford with low-carbon materials such as aluminium, lithium, and copper from its Rincon lithium project in Argentina.
Other ASX stocks co-partnered with big automakers
European Lithium (ASX:EUR) signed a binding long term offtake agreement with BMW for battery grade lithium hydroxide (LiOH) from its Wolfsberg Lithium project in Austria.
Meanwhile, Queensland Pacific Metals (ASX:QPM) entered into a binding equity subscription agreement and offtake agreement with General Motors in October 2022 to form the beginning of a “long-term strategic collaboration, and Ioneer’s (ASX:INR) deal with Ford includes the supply of 7,000tpa of lithium carbonate over a five-year term from its Rhyolite Ridge lithium-boron project in Nevada, starting in 2025.
This content first appeared on stockhead.com.au
At Stockhead we tell it like it is. While Magnis Energy Technologies, European Lithium, Queensland Pacific Metals, and Ioneer are Stockhead clients they did not sponsor this article.
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