Tesla has talked with Glencore about buying stake of the Swiss mining giant.
Sources close to the matter told Financial Times that Tesla and Glencore held preliminary discussions last year. Talks between the company continued until March 2022. Glencore’s chief executive Gary Eagle visited Tesla’s Fremont Factory in March.
Tesla planned to buy a minority equity stake of 10% to 20% in Glencore but the two companies were not able to reach a deal. The EV manufacturer had concerns over Glencore’s compatibility with Tesla’s environmental goals.
The Swiss mining giant is the world’s largest trading house and producer of cobalt in the Democratic Republic of Congo (DRC), Australia, and Canada.
Some of the cobalt mining practices in the DRC have been mired in controversy over the years. Some mining companies with businesses in the DRC are accused of hiring underage miners. Cobalt mining in the DRC has also raised public health concerns for miners due to continued exposure to dust and particles, resulting in lung and skin diseases.
Although Glencore states that its main purpose is to “responsibly” source commodities “that advance everyday life.” The Swiss company released plans to align itself with the goals of the Paris Agreement in 2021. It plans to reach Net Zero emissions by 2050, starting with depleting its coal portfolio over time.
Tesla in the Mining Industry
The discussions between Tesla and Glencore didn’t yield any results. However, the talks hint that Tesla is seriously thinking of entering the mining industry as it tries to ramp EV production worldwide and its 4680 assembly line.
Glencore seemed like a good company for Tesla to start building ties in the mining industry since it secured a cobalt offtake agreement with the Swiss mining giant years ago for Giga Shanghai and Giga Berlin. Tesla’s talks with Glencore probably provided some insights into the mining industry, specifically the process between mining to refining and production.
Tesla has been open about entering the mining industry. The company doesn’t seem too keen on mining but would consider joining the industry if necessary. At the last earnings call, Morgan Stanley’s Adam Jonas asked Tesla executives about vertically integrating into mining.
“We’ll do whatever we have to. Without limiting factors, we’ll do. We do not personally constrain ourselves. We don’t particularly integrate just for the hell of particularly integrating,” Elon Musk replied to Jonas.
“Like if there was a great supplier who’s better than us or we think actively is very good, or even where the economics of comparative advantage suggests that we should use that supplier, even if we could beat them, but we could use our resources to do something else that will be more productive, then we would in source in that case. But if we have to go mine, we will mine,” Musk explained.
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