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Proposed northern Minnesota nickel mine inks deal with Tesla

UPDATED: Mon., Jan. 10, 2022

A 2021 Model 3 sedan charges at a Tesla dealership in Littleton, Colo., on June 27, 2021.  (Associated Press)
A 2021 Model 3 sedan charges at a Tesla dealership in Littleton, Colo., on June 27, 2021. (Associated Press)
Mike Hughlett Star Tribune

The company behind a proposed Minnesota nickel mine, Talon Metals, said Monday it has inked a major supply deal with Tesla.

The electric vehicle giant committed to buy 75,000 metric tons of nickel concentrate over six years from Talon’s planned mine in Tamarack, about 50 miles west of Duluth. Tesla would have a preferential right to go above that amount.

The deal also calls for Talon to make every “commercially reasonable” effort to be operational by Jan. 1, 2026.

Nickel is a key ingredient for electric vehicle batteries. Tesla has been increasingly hammering out deals directly with producers of the metal, as well as other components of EV batteries.

“This agreement is the start of an innovative partnership between Tesla and Talon for the responsible production of battery materials directly from the mine to the battery cathode,” Talon’s CEO, Henri van Rooyen, said in a press statement.

Essentially, Tesla would buy claim more than half of the mine’s annual production of nickel concentrate, which would be further refined before it could be used to make batteries.

Talon and its partner – global mining giant Rio Tinto – would create a rarity in the United States with the Tamarack project: a mine whose primary product is nickel, with copper as a secondary mineral.

Still, Talon must prove the economics of the mine to investors. And it has not yet undergone the state’s environmental and mine permitting process, which is expected to begin in earnest next year.

Talon’s pitch for the mine includes a “direct air” carbon capture system, which would suck CO2 from the air and permanently store it in rock waste from the mine. It’s still in development, though a project based on a similar idea opened earlier this year in Iceland

That project may have helped sell Tesla on the Tamarack project.

“The Talon team has taken an innovative approach to the discovery, development and production of battery materials, including to permanently store carbon as part of mine operations,” said Drew Baglino, senior vice president of powertrain and energy engineering at Tesla.

“Responsible sourcing of battery materials has long been a focus for Tesla, and this project has the promise to accelerate the production of sustainable energy products in North America.”

The Tamarack Mine is likely to face opposition from environmental groups concerned with acid mine waste polluting lakes, rivers and wetlands.

Anglo-Australian Rio Tinto, the world’s second largest mining company, began a serious prospecting program at the Tamarack site 20 years ago. In Rio signed up Talon, as a joint venture partner.

Talon currently owns a 51% interest in the Tamarack Nickel Project and has the right to increase its interest by 9% to 60%.

Anglo-Australian Rio Tinto is the world’s second largest mining company, operating mines, smelters and metal refineries in 35 countries, and handling minerals from iron ore to copper to diamonds.

In 2018, Rio signed up Talon as joint venture partner for the Tamarack project. Rio “is not in the business of developing small mines,” said Hammond, the minerals economist. “So they will farm out [the development] to Talon.”

Talon, whose shares trade on the Toronto Stock Exchange for about 70 cents, is based in the British Virgin Islands and run from Canada.

It’s a “junior” miner, a company devoted to mining exploration, often for a single project.

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