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Tesla to meet with Indigenous activists as it plots future supply chain

SNL Image

An aerial view of the construction site of a new Tesla Gigafactory near Berlin, Germany on Sept. 6, 2020.
Source: Sean Gallup/Getty Images News via Getty Images

Tesla Inc. will meet with a network of Russian Indigenous activists campaigning for the electric vehicle company to boycott nickel supplied by PJSC Norilsk Nickel Co., the world's largest producer of high-grade nickel, according to one of the activists involved with the campaign.

Pavel Sulyandziga, president of Indigenous rights group Batani Foundation, told S&P Global Market Intelligence through an interpreter that advocates with the boycott campaign are scheduled to speak with Tesla representatives involved with corporate social responsibility on Oct. 7. Sulyandziga said the group plans to reiterate a request made in an open letter released in early August that Tesla not engage with Norilsk Nickel, also known as NorNickel, which is facing billions in damages over major oil spills in the Arctic.

"[Our] message to Tesla is quite simple: We want companies that are participating in the green economy, and that are concerned with greenhouse gas emissions, to do their environmentally friendly work at home, but they also have to think about any possible harm that they are thinking about for their industrial needs. The level of impact abroad," the activist said.

Tesla did not respond to a request for comment.

The planned meeting would occur less than a month after the global metals and mining industry saw the departures of top executives at Rio Tinto, a consequence of the company's destruction of a 46,000-year-old Aboriginal heritage site in Western Australia during a mine expansion. Analysts believed the fallout inside the mining giant resulted from investors having a close eye on corporate social reputation in a time of worldwide racial and cultural conflict.

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The conversation would also take place as Tesla is making moves to expand into the mining and processing of its battery metals with intentions to bring costs down and reduce its environmental and social impact. On lithium alone, Tesla has acquired a 10,000-acre lithium clay deposit in Nevada, inked a five-year spodumene concentrate deal with Piedmont Lithium Ltd., and began reportedly considering a 10% stake in LG Chem Ltd.'s battery business. Spodumene is a mineral and a source of lithium.

However, when it comes to reducing risks associated with its batteries, securing a sustainable and humane source of nickel may prove to be a vital challenge for Tesla. The company plans to use nickel in its lithium-ion batteries to ween off of the use of cobalt, a resource primarily produced in Democratic Republic of Congo and associated with accusations of poor labor practices.

Tesla CEO Elon Musk blew up nickel markets in July by offering a "giant" contract to companies that could sustainably mine the metal. Earlier in September, the company was reported to be in talks with Canadian mining company GIGA Metals Corp. on developing a mine that would produce low-carbon nickel. Tesla has been implementing prototypes of its nickel-heavy batteries for "several months," Musk said Sept. 26 on Twitter.

It would not be unusual for a mining company to meet directly with stakeholders, including indigenous groups, BloombergNEF analyst Kwasi Ampofo said in a Sept. 29 email. However, automobile sector engagement with Indigenous populations is historically rare. The proliferation of EVs may be requiring car companies to engage with upstream stakeholders more regularly to ensure mining practices align with their environmental and social goals, Ampofo said.

For example, in the cobalt market, BloombergNEF research indicates only 14% of automakers, battery cell manufacturers and mining companies engage directly with artisanal miners, Ampofo said. "Such engagements will have to improve as sustainability becomes a core theme in EV production," he added. In early September, Tesla joined a new initiative known as the Fair Cobalt Alliance, which aims to support informal cobalt miners in Congo.

Benchmark Mineral Intelligence Managing Director Simon Moores recently said the Tesla-Piedmont deal for lithium indicates the EV behemoth "has clearly come to the realization that it cannot rely on the upstream of the supply chain or investors to expand quickly enough for its needs."

"Due to inactivity in developing new raw material supply and the lack of a long term strategy, we are starting to see this sway of industrial power move downstream towards the auto [original equipment manufacturers]," Moores said in a Sept. 28 statement. "This will also send warning shots to nickel."

Sulyandziga said the Indigenous rights advocacy network plans to replicate their Tesla campaign with other car companies. Activists have targeted the EV supply chain specifically because it claims to be working toward a more sustainable world, he said.

"We are engaging with European organizations and one of the questions we have posed to our European partners is, 'how do European EV makers work with NorNickel?'" Sulyandziga said.