Tesla wants to reduce dependence on car component supplier China

A Tesla turned to Mozambique for the production of an important component of its electric car batteries. Analysts believe it is a first-of-its-kind deal designed to reduce its dependence on China for graphite.

to company of Elon Musk signed an agreement last month with Australia’s Syrah Resources, which operates one of the world’s largest graphite mines in the southern African country.

It is a unique partnership between a manufacturer of electric vehicles and a producer of the essential mineral for lithium-ion batteries. The value of the business was not disclosed.

Tesla will buy the material from the company’s processing plant in Vidalia, Louisiana, which sources graphite from its mine in Balama, Mozambique.

The Austin, Texas-based electric automaker plans to buy 80% of what the plant produces — 8,000 tons of graphite a year — by 2025, according to the understanding. Syrah must prove that the material meets Tesla’s standards.

The deal is part of Tesla’s plan to increase its ability to make its own batteries to reduce its dependence on China, which dominates global graphite markets, said Simon Moores, of battery materials data and intelligence provider at United Kingdom Benchmark Mineral Intelligence.

“It starts at the top with geopolitics,” Moores said. “The US wants to build enough domestic capacity to be able to build [baterias de íons de lítio] within the USA. And this agreement will allow Tesla to source graphite independently from China.”

Moores added that producing the batteries in U.S will reduce some of the questions Tesla faces about its ties to China, where there are environmental concerns at some mines.

The automaker too set up a showroom in Xinjiang region, where Chinese officials are accused of carrying out forced labor and other human rights abuses against mostly Muslim ethnic minorities.