China’s King of Nickel is betting big on green batteries as Tesla dangles ‘giant contract’ for miners

Husband-and-wife team at Tsingshan shocks market twice this month by announcing two targets in supplying batterie to local EV market

Prices of metal suffered their biggest two-day slump in a decade as investors factored in the additional supply

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A worker is seen on a production line at a lithium battery manufacturing plant for automotive use in Tangshan in northern Hebei province. Photo: Xinhua

Published: 1:23pm, 14 Mar 2021Updated: 1:45pm, 14 Mar 2021

Tsingshan Holding Group made numerous bold moves on its path to becoming the world’s largest nickel producer but its new plan to supply carmakers with cheap, clean metal could be its biggest breakthrough yet.

The Chinese company shocked the nickel market twice this month by targeting two significant challenges for makers of electric vehicles (EV) and their batteries: first, getting enough nickel, and second, ensuring it’s delivered in a climate-friendly way.

Tesla’s Elon Musk has said nickel is the metal that concerns him most as he looks to scale up battery-cell production, and last year he promised a “giant contract” for miners to encourage production. Without new sources of supply, the robust EV industry could face a critical shortage within a few years.

“You have, essentially, a market that will grow exponentially in size, but you do not want to inhibit growth by running short of feed,” said Michael Widmer, head of metals research at Bank of America Merrill Lynch. “What we are seeing in nickel is Tsingshan trying to resolve those issues.”

Visitors view a Tesla Model 3 during the 18th Shanghai International Automobile Industry Exhibition. Photo: Xinhua

Teaming up with Tsingshan would appear to be an obvious choice for Tesla and rivals, but they are not just looking for cheap, abundant nickel. They want it to be green, too. Nickel is a dirty industry, and Tsingshan’s rise was driven largely by its development of a low-cost production process that is also extremely carbon-intensive.