Elon Musk promises a "giant contract" with the miner that can supply nickel for Tesla Inc batteries at low cost with minimal environmental impact, yet the industry's messy track record may make that deal difficult to clinch.
Recent accidents such as a diesel spill in Arctic Russia and a burst waste pipeline in Papua New Guinea suggest the industry will struggle to meet Musk's request for a large quantity of the metal produced in an "efficient" and "environmentally sensitive" way.
As the world's most-valuable carmaker extends manufacturing arms to China and Germany, its billionaire owner may have to rely increasingly on the biggest supplier of nickel: Indonesia. Yet miners there are being criticized for plans to pump waste into the open sea, meaning Musk and other carmakers may need to compromise on sourcing standards while trying to compel the industry to clean up its act, reported Livemint.
"Nickel projects being built in Southeast Asia will rely on coal, fuel oil or diesel to run their operations and will leave a very large carbon footprint," said Sam Riggall, chief executive officer of Clean TeQ Holdings Ltd., which is developing an Australian mine to supply nickel for vehicle batteries. "This sort of makes a bit of a mockery of driving a green, sustainable car."
EVs will comprise 58% of global passenger car sales in 2040, compared with 10% by 2025, according to BloombergNEF. Nickel helps cram more energy into cheaper and smaller battery packs, allowing EVs to charge faster and travel farther between plug-ins.
Indonesia holds about a quarter of all nickel reserves. To meet demand from carmakers, companies there are investing in projects that will use acid to process low-grade nickel ore and produce high-quality battery chemicals. The miners plan to dilute the byproducts and pipe them out to sea – a process known as deep-sea tailings disposal.
A major spill last year arising from a ruptured pipeline at the Ramu nickel mine in Papua New Guinea highlighted the potential hazards of the process.
"The disposed tailings will have a drastic, non-reversible impact on the ecosystems, marine life and humankind," Alex Mojon, president of the Swiss Association for Quality and Environmental Management, said in an Aug. 11 report on the accident.
Metallurgical Corp of China, which runs the Ramu nickel mine, declined to comment.
In the same way EV makers sought to reduce their exposure to cobalt from the Democratic Republic of Congo because of human-rights concerns, they also may decide to halt purchases of nickel from Indonesian mines using this combination of high-pressure acid leaching, or HPAL, and deep-sea tailings disposal, the consultancy Benchmark Minerals said.
"For new nickel supply, Elon and the battery industry look to HPAL in Indonesia," Simon Moores, founder and managing director of London-based Benchmark Minerals, said in an email. "Yet deep water disposal methods are increasingly putting these mines on the same black list as illegal artisanal cobalt from the DRC."
Tesla didn't respond to a request for comment. Chinese battery maker GEM Co., which is jointly developing a HPAL project in Indonesia with steelmaker Tsingshan Holding Group Co., declined to comment. Tsingshan didn't immediately respond to a request for comment.