Tesla cannot continue to grow without ASX shares that mine materials for lithium batteries. The scale will need as much supply as possible.
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The Tesla Inc (NASDAQ: TSLA) share price has been one of the great gravity defying shares of 2020. Tesla is at the vanguard of electric cars, which is impressive enough, but also in the field of power transmission and distribution. Accordingly, there is an incoming wave of predominantly lithium batteries designed to be used for multiple purposes. These require materials produced by some ASX shares.
Building batteries is not going to be possible without a steady, high quality supply of the necessary materials. Lithium battery production will need the continuous supply of mining companies operating at scale. Companies like the many ASX shares producing these materials.
Tesla needs ASX shares
In a a conference by BenchMark Mineral Intelligence in Perth in 2018, BenchMark Managing Director, Mr Simon Moores, said that by 2028, “…the the giga-factories being built by Elon Musk’s Tesla would need 840,000 tonnes per year of lithium, 193,000 tonnes per year of cobalt, 1.1 million tonnes per year of graphite anode, and 480,000 tonnes of nickel chemical.”
Nonferrous metals and minerals featuring highly in lithium-ion batteries are lithium, cobalt, nickel, manganese, graphite, copper and aluminium. The first four are used in cathodes, although lithium is also used in electrolyte. The last three are used in the anode. In particular, graphite wrapped in an alloy of copper or aluminium.
A range of ASX shares produce lithium. For example, companies like Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS). Orocobre is building an industrial chemicals and minerals business in Argentina through the construction and operation of lithium brine, potash and boron projects. It has also built a lithium processing facility in the north of Argentina.
South32 Ltd (ASX: S32) is a leading miner of manganese. Moreover, in FY20 the company produced 854,000 wet metric tonnes of manganese ore in the June quarter. South32 has a 60% interest in its Australian manganese operations. These are the Groote Eylandt Mining Company Operation (GEMCO) and the Tasmanian Electro Metallurgical Company Operation (TEMCO).
Ecograf Ltd (ASX: EGR) has two bases of operation. First, in Tanzania it is developing the Epanko Graphite Project. This is a long life, highly profitable graphite project. The forecast for this plant is 60,000 tonnes per year of graphite products. Second, the company is developing a processing plant in Kwinana, Western Australia. This will aim to produce spherical graphite using a new eco-friendly process to sell directly to lithium-ion battery manufacturers. The plant will draw both from recycled battery materials as well as graphite flak products from the Americas, Asia and Australia.
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Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.