While the deal has yet to be officially announced, Bloomberg is reporting that Tesla has signed a new agreement which will see it buy cobalt from Glencore, a British multinational mining company headquartered in Switzerland.
Cobalt is a key ingredient in electric vehicle (EV) batteries, and with the increase in the number of EVs being manufactured each year by both Tesla and other manufacturers, there could be a shortage in the coming years.
According to sources familiar with the details of the deal, it could see Tesla buy as much as 6,000 tons of cobalt, the most expensive elements that make up an EV battery, each year for Giga Shanghai and Giga Berlin.
Glencore currently gets most of its cobalt as a byproduct from its copper mine in the Democratic Republic of the Congo.
Based on current production estimates at Giga Shanghai of up to 3,000 cars per week, Tesla would need about 1,200 tons of the element. But production at the new factory is only ramping up, as phase 2 of the plant is nearing completion, meaning it will need to increase its supply soon.
Despite the reliance on cobalt in the EV industry today, Tesla is currently working towards manufacturing a cobalt-free battery with CATL, as Drive Tesla reported earlier this year.
Even so, the switch to cobalt-free batteries could take years, so Tesla will still need a supply of cobalt for the near future.
News of this deal also comes at the same time Tesla announces a new partnership with Panasonic to provide EV batteries for its Giga Nevada plant in the US.
Featured image: Glencore Katanga mine