Last month, Tesla signed an agreement with Australia’s Syrah Resources, which runs one of the world’s biggest graphite mines in the southern African country of Mozambique.
Graphite is a critical mineral needed to produce lithium-ion batteries, which Tesla uses to operate their vehicles. Syrah Resources will mine the graphite in Balama, Mozambique, and send it to their processing plant in Vidalia, Louisiana, where Tesla will buy 80% of what the plant produces. Starting in 2025, that will be a purchase of 8,000 tons of graphite per year, according to the agreement.
This deal is a part of Tesla’s plan to reduce dependency on China for graphite, which dominates the world in graphite markets, according to Simon Moores of Benchmark Mineral Intelligence, a company based in the UK that provides battery materials data.
“It starts at the top with geopolitics,” said Moores. “The U.S. wants to build enough capacity domestically to be able to build [lithium-ion batteries] within the U.S.A. And this deal will permit Tesla to source graphite independent from China.”
Producing batteries in the U.S. could reduce the backlash Tesla is facing about its relationship with China and the country’s environmental concerns at some of their mines.
Moores also said that the battery industry has been in the midst of a graphite shortage in recent months. Graphite is necessary for production because it stores the lithium inside batteries until it is needed to generate electricity by splitting it into charged electrons and ions. Tesla manufactures almost a million cars per year and still “can’t get enough batteries,” he added.
Tesla recently started building its own battery factory in the company’s headquarters in Austin. Even though this is another step in the direction of self-sufficiency, Moores has said that buying batteries from other manufacturers isn’t something that’s going to change this decade.
China remains the biggest global market for Tesla. The company sells about 450,000 vehicles in the country per year, compared to about 350,000 in the U.S.
Cabo Delgado, as one of the world’s largest graphite mines, produces 350,000 tons of graphite a year.