Tesla was interested in purchasing a stake in Swiss commodities group Glencore, the world’s largest listed trading house and biggest producer of cobalt.
People familiar with the matter state that talks between the two companies started last year with Tesla pondering the possibility of purchasing a 10-20 per cent stake of Glencore. Talks continued in March when Glencore chief executive Gary Nagle made a visit to Tesla’s factory in Fremont, California.
The electric car manufacturer secured a cobalt offtake agreement with Glencore two years ago and Elon Musk has previously expressed his desire to take greater control of all manufacturing steps of its batteries. He has even said that Tesla “might actually have to get into the mining & refining [of lithium] directly at scale, unless costs improve.” Glencore produces cobalt through its mines in the Democratic Republic of Congo, Australia, and Canada.
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Talks between Tesla and Glencore ended because of the carmaker’s concerns about Glencore’s large coal mining business clashing with its environmental goals. The Swiss firm also produces nickel, copper, and other important materials used in batteries. It also recently started trading lithium, although it does not yet mine it.
While unnamed sources with knowledge of the discussions indicate Tesla was serious about taking a potential stake in Glencore, some analysts suggest that Musk has made comments about mineral supply shortages to prompt suppliers to increase output, not because he actually wants to invest in mining groups or trading houses.
While neither Tesla nor Glencore have responded to the Financial Times report, Glencore isn’t just supplying Tesla and also has cobalt offtake agreements with SK Innovation, Samsung SDI, BMW, and General Motors.
Glencore provides Tesla with up to 6,000 tons of cobalt a year to build lithium-ion batteries at its factories in Shanghai, China and Berlin, Germany.