Tesla Inc. (TSLA
)
CEO Elon Musk reportedly traveled to Chile during the holiday season, sparking speculation that the electric car maker is keen to tap the South American country’s vast lithium reserves.
Shortly after Chilean media broke the news of Musk’s visit, local businessmen and politicians took to social media to voice their excitement at his arrival. Jos Piera, a Chilean economist who previously served as minister of labor, social security and mining, sent a note to Musk on Twitter welcoming him to the “Saudi Arabia of lithium.” Local politician Jos Miguel Castro also published a similar tweet, inviting Tesla’s CEO to visit “the biggest lithium resources in the world.”
The decision by prominent figures to link Musk’s arrival in Chile to lithium shouldn’t come as a big surprise. As they referenced in their tweets, the country is home to some of the world’s biggest reserves of the metal, which, among other things, is used to make the batteries that power electric cars. (See also: 3 Reasons to Buy Lithium.)
A year ago, Musk said Tesla had secured enough lithium supply to see it through 2017. However, with a production ramp up of the Model 3 car , the company is likely to need more of the metal in the year ahead. According to Bloomberg New Energy Finance, the next dozen years will drain less than 1 percent of the reserves in the ground, but the concern is that there aren't enough production sites to meet rapidly growing demand.
Tesla has already signed a conditional supply agreement with Pure Energy Minerals Ltd. (PEMIF
), a Vancouver, Canada-based firm that has access to 9,500 acres of lithium brine, according to
Electrek. However, it is believed that Tesla now requires more of the metal to meet its ambitious production schedules.
The Palo Alto, California-based company has been in talks with government officials in Chile for several years about sourcing lithium. In 2015, senior executives at Tesla discussed creating a partnership with state-owned mining firm Codelco to make this happen, according to Electrek.
News of Musk’s Chile visit came less than a month after he unveiled the world’s biggest lithium ion battery. The battery, which was built in under 100 days, was switched on to feed Australia’s shaky power grid. (See also: Tesla Turns on World's Largest Lithium-Ion Battery.)