Tesla Deal with Talon Metal is Not What it Seems
Elon Musk is a master manipulator. He knows that retail investors listen to him and often uses that to move the market. Last year, he announced a deal with Piedmont Lithium (PLL), touting it as a move to reduce US reliance on imports. Piedmont stock went up, despite them not being able to deliver. North Carolina hasn’t approved their mining permit yet.
Talon Metal (TSE:TLO) is in a similar position. They’re not mining and processing nickel. Talon is partnered with Rio Tinto (RIO) to build the Tamarack mine project in Minnesota. PolyMet Mining Corp (PLM) is doing the same thing and they’ve been mired in legal challenges for sixteen years. Tamarack is just getting started. Musk will pay for nickel, not lawsuits.
China’s Ganfeng Lithium is Tesla’s Primary Supplier
Expounding on America’s need for lithium and nickel independence gives Elon Musk public relations airtime, but Tesla is buying their lithium from Gangfeng Lithium Co. (SHE:002460). Musk signed a three-year supply deal with them last November. It didn’t help their stock. Gangfeng share prices are down 23%. The “Elon effect” doesn’t work in China.
In fairness, Gangfeng is the world’s largest producer of battery-grade lithium and most of America’s lithium is still buried beneath the Nevada desert. The US government has acknowledged its importance and several mining projects are under development, but environmental concerns around lithium mining are slowing the process.
Nickel and copper, which are essential for EV battery production, have their share of issues in the US also. Nearly 60% of unmanufactured copper comes from Chile. 42% of our nickel is imported from Canada. Developing projects in Minnesota and New Mexico could shift those numbers domestically, but it will be nearly a decade before we’re self-sustaining.
Developing Safer Mining and Processing for EV Battery Materials
Lost amid the clamor about electric vehicles being safer for the environmental is the decidedly unsafe mining and processing that goes into producing the lithium, copper, and nickel required for EV batteries. Lithium mining contaminates water supplies. Copper mining creates acidic mists. Nickel mining produces greenhouse gas emissions.
The Paris Accords, which the US is once again a part of, has motivated 196 nations around the world to reduce greenhouse gas emissions. The mining industry has taken that into account and many companies are working on developing safer processes with minimal economic impact. Any investment in this space is a long play, so I’m focusing on new tech today.
The first company that comes to mind is International Battery Metals Ltd (RHHNF). They’re also known as Rheingold Exploration Corp. You can find them on the OTC market. They’re a tech company, not a mining company, that has developed an environmentally friendly process for extracting lithium from brine. Many US lithium miners will need that to get mining permits.
If you’re looking for a broader investment in the space, check out the VanEck Green Metals ETF (GMET). It was launched last November and hasn’t really gained much traction yet, so I can’t really speak to its sustainability. The fund invests in companies that mine and process “green” metals necessary for the transition to electric vehicles and clean energy.