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Tesla inks deal to get key battery component outside China

LONDON (AP) – Tesla is turning to Mozambique for a key component in its electric car batteries in what analysts believe is a first-of-its-kind deal designed to reduce its dependence on China for graphite.

Elon Musk’s company signed an agreement last month with Australia’s Syrah Resources, which operates one of the world’s largest graphite mines in the southern African country. It’s a unique partnership between an electric vehicle manufacturer and a producer of the mineral that is critical for lithium-ion batteries. The value of the deal hasn’t been released.

Tesla will buy the material from the company’s processing plant in Vidalia, Louisiana, which sources graphite from its mine in Balama, Mozambique. The Austin, Texas-based electric automaker plans to buy up 80 per cent of what the plant produces – 8,000 tonnes of graphite per year – starting in 2025, according to the agreement. Syrah must prove the material meets Tesla’s standards.

The deal is part of Tesla’s plan to ramp up its capacity to make its own batteries so it can reduce its dependence on China, which dominates global graphite markets, said Simon Moores of United Kingdom-based battery materials data and intelligence provider, Benchmark Mineral Intelligence.

“It starts at the top with geopolitics,” Moores said. “The United States (US) wants to build enough capacity domestically to be able to build (lithium-ion batteries) within the USA. And this deal will permit Tesla to source graphite independent from China.”

A Tesla charges at a station in Topeka, Kansas. PHOTO: AP

Moores said producing the batteries in the US will reduce some of the questions Tesla is facing about its ties to China.

A message was left seeking comment from Tesla, which has disbanded its media relations department.

The battery industry has been confronted with a short supply of graphite in recent months, Moores said. Graphite stores lithium inside a battery until it’s needed to generate electricity by splitting into charged ions and electrons.

It comes as every major automaker is racing to get into electric vehicles amid concerns about climate change.

Tesla is making almost a million electric cars per year, and sourcing enough batteries is its biggest constraint, he said.

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