Can Elon Musk and Tesla save the mining industry? – by Andrew Critchlow (The Telegraph – May 25, 2015)

New generation of batteries will make cobalt, lithium and nickel essential investments in commodities

When it comes to investing in the future of commodities forget about resources such as iron ore and coal, which dominated the industrial economies of the old world order. The new currency for smart commodity investors will be cobalt, which is poised to play a growing role in everyone’s life if the vision of American billionaire Elon Musk to have a Tesla Motors battery powering homes comes to fruition.

Mr Musk, the force behind Tesla electric cars and Space X, wants to make his revolutionary next generation battery packs on walls a standard fixture for every household along with a rechargeable car parked in the garage and a solar panel on the roof. Tesla is in the process of building a giant new battery production facility in Nevada known as the Gigafactory to meet expected demand from this revolution in domestic energy supply and storage.

Tesla plans to produce two types of battery at the facility that is taking shape in the desert and so far the exact specification of the lithium-ion power units is being kept a close secret. The company currently uses batteries sourced from Panasonic to power its S-model cars.

These batteries use a cathode that is comprised mainly of lithium, nickel, cobalt and aluminium oxide. According to Mr Musk, the company will use a more powerful battery for the home grid, which will utilise nickel, manganese and cobalt oxide for its cathode.

Should the concept capture the imagination of Americans who are increasingly conscious of reducing their carbon footprint demand for these crucial elements could skyrocket in addition to the already robust global demand for lithium, nickel and copper.

Major mining companies are already “future proofing” their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry.

According to research by the broker Macquarie, Tesla alone may require up to 10,000 tonnes per year of cobalt, which accounts for around 10pc of the current global market.

Cobalt supply is currently plentiful but the world’s largest producers are located in the Democratic Republic of Congo and Zambia, which are both countries with a history of problem with mining outages.

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