Why Tesla Considered Taking A Stake In Glencore

Tesla was in talks with Glencore earlier this year about potentially buying a stake in the mining giant, sources with knowledge of the matter told the Financial Times on Monday, as EV manufacturers are increasingly looking to forge partnerships and closer ties with miners to procure critical metals.

But the talks, initiated last year, ended in March this year without a deal being reached, FT’s sources said.   

Tesla was said to be considering buying up to 20% of Glencore, a mining giant with an extensive production of nickel, copper, cobalt, and other minerals. Glencore is also the biggest recycler of batteries in the world and is reportedly looking to add lithium to its trading portfolio, although the company itself doesn’t mine lithium.

Despite the fact that the rumored Tesla-Glencore equity stake deal didn’t go through, the relationships between electric vehicle manufacturers and miners have become closer in recent years as carmakers are competing to secure metals supply for EV batteries.

The expected EV boom will hinge on the availability of critical raw materials such as copper, nickel, lithium, aluminum, and cobalt.

Other carmakers have invested in metals mining start-ups, but none have taken a major stake in a legacy mining giant so far.

For example, Stellantis became this year the second-largest shareholder in Vulcan Energy Resources, a start-up lithium producer that is aiming to become the world’s first lithium producer with net-zero greenhouse gas emissions.

Meanwhile, analysts and copper producers have recently said that the pace of the energy transition could be slowed by a looming shortage of copper.

The decarbonization drive will increase the intensity of copper use globally, U.S. copper producer Freeport-McMoRan, the world’s largest listed copper miner, said in a Q3 earnings presentation earlier this month. Structural demand growth tied to decarbonization, combined with limited supply development, is expected to result in large supply deficits in the copper market, the company noted.   

By Michael Kern for Oilprice.com

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