Tesla plans to buy lithium for Gigafactory from nearby Nevada mine – by Katie Fehrenbacher (Fortune Magazine – September 16, 2015)



The electric carmaker may get some of the lithium it needs for its Nevada battery factory from a local mining project.

Tesla plans to buy lithium, a critical ingredient in its batteries, from a mining project that’s under development 200 miles from its battery factory near Reno, Nev.

Pure Energy Minerals, which is leasing the Nevada land for mining, announced the supply agreement with the electric car maker on Wednesday.

The deal is highly unusual in the world of battery manufacturing. Much of the world’s lithium comes from Argentina, Chile, Bolivia, Australia and eastern China, and is shipped long distances to battery makers in Asia.

But Tesla, a risk-taker and innovator under CEO Elon Musk, is experimenting with new ways to get materials for its batteries and potentially lower its costs. When Tesla chose Nevada for its Gigafactory last year, industry-watchers speculated that the state’s ample lithium supply was one of the attractions.

The agreement with Pure Energy Minerals isn’t the first lithium supply deal for Tesla. Last month, the company said it was interested in buying lithium from a mine in Northern Mexico.

Tesla TSLA 0.08% will likely have a handful of lithium supply deals signed by the time its Nevada factory is operating at full capacity, which is expected in 2020. Construction has already started on the battery factory, where the assembly lines are to churn out enough lithium-ion batteries for 500,000 electric cars. Pure Energy Minerals said its lithium “will cover a portion of Tesla’s needs with the remainder to come from other sources.”

The lithium that Pure Energy Minerals plans to mine in Nevada is in underground salty aquifers across an 8,000-acre area.

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