Tamarack, Minnesota, population 94, could become the site of a new domestic nickel mine, a rarity in the U.S.
Here, Talon Metals and Rio Tinto, one of the world's largest mining companies, are developing plans for the project.
And though the proposed mine is years away from production, Talon has already secured a supply deal with Tesla worth around 1.5 billion to get
its nickel into EV batteries.
I want to be able to say that, hey there's a Tesla driving down the road and it's actually got Tamarack U.S.
nickel in it. That's my dream.
That's what I'd like to do.
Nickel is a key component of most lithium-ion batteries.
The more nickel, the more energy density.
And with the EV boom, demand for nickel is on the rise.
Over time, that trend towards increasing energy density has tended to push the nickel content up in the cell.
And really, when we look to the future, we're heading towards, you know, 90% of the cathode being nickel for certain cell types.
But that also means that we're headed towards a shortage of the type of high-grade nickel that's needed for EV batteries.
Russia has a lot of this nickel, and amidst its invasion of Ukraine, prices have soared to record highs amidst fears of supply disruptions.
The London Metal Exchange even had to suspend nickel trading after an unprecedented 250% price spike in early March.
But the U.S. itself is short on resources.
The Eagle Mine in Michigan is the nation's only primary nickel mine, but it's expected to close in 2025.
That means that Tamarack is the only high-grade, undeveloped nickel reserve that we know about in the U.S.
today. The project pipeline for these mines has largely dried up elsewhere, and that has some automakers begging for help.
Any mining companies out there, please mine more nickel.
Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an
environmentally sensitive way.
But mining in the water-rich area of Minnesota, where Tamarack is located, is not without controversy.
How much nickel will be getting into our drinking water?
Where will that toxic nickel go when an underground mine has gaps and fissures?
Talon is optimistic that it can serve as an example of responsible mining practices, while others are looking to alternatives like battery recycling
as the future. Either way, the world's automakers need to figure out how to acquire a whole lot more nickel if they're going to meet their
ambitious EV targets.
The majority of the world's nickel is used in the stainless steel industry, though that balance is expected to shift rapidly in the coming decades.
Batteries probably making up slightly more than 10% of total demand, which is obviously up on where we were two or three years ago.
But it's still a fairly small component of the market.
If we go forward 10 to 15 years, the battery sector could provide more than 50% of the demand for nickel units.
But not all nickel is high quality enough for use in batteries.
Not all nickel can go into an electric vehicle battery.
It needs to be what's called "class one." And that's where nickel sulfides are really important, because they're the most pure nickel.
Nickel sulfide is typically found deep within the earth and is extracted via underground mines.
Tamarack is one of only two nickel sulfide deposits in the us
So there's Eagle in Michigan and then there's Tamarack and that's it for high-grade nickel deposits.
Currently, the U.S. sources much of its battery-grade nickel from Canada, Norway, Australia and Finland.
But production capacity is not growing at nearly the same rate as demand forecasts.
And since Russia is also a major supplier of high-grade nickel, the country's war in Ukraine could throw EV-makers plans into disarray.
Amidst the surge in nickel prices, Tesla has already raised the price of its Model 3 and Model Y.
Russia is the world's largest producer of primary nickel products used in EVs.
So if you have a game changer from here forward in the sourcing of that material, there is no possible way
that they will meet those targets in the timeframe which they lay out.
Yep.
Additional nickel could come from laterites though, which are a lower quality but more prevalent type of nickel deposit.
These ores are found near the earth's surface and are extracted via open pit mining.
Indonesia and the Philippines mined the most laterites, while Australia and Brazil also have large reserves.
The problem though, is that upgrading low-grade nickel laterites for use in EV batteries involves extremely energy-intensive processes such as high
pressure acid leaching, in which nickel is extracted from a laterite ore after being heated to an extremely high temperature, mixed with sulfuric
acid and pressurized.
The CO2 footprint would be on the order of about 15 to 20 times more than what we can do with a deposit like what you have at the Tamarack Project.
We have for a long time outsourced some of this admittedly dirtier part of the economy to developing economies.
That's why many in the EV industry see developing new nickel sulfide mines domestically and in allied countries like Canada as a key goal.
Not only does it potentially bring supply closer to a North American end user, it gives that end user also the ability to say that they are
using a sort of cleaner source of nickel, which is obviously good for their marketing of their product.
Right now, nickel is often mined in one country, refined or transformed into nickel sulfate in another, and sent overseas yet again for battery
assembly, adding to the carbon intensity of the whole process.
For example, in Canada we have a lot of mining, smelting and refining of nickel, but beyond that you're going to have to export the nickel
to other countries to transform that into nickel sulfate.
And even if you did that, let's say to the USA, that sulfate would still have to be exported to another country to make it into a precursor or a
cathode active material.
The Eagle Mine in Michigan, for example, does send its nickel concentrate to Canada for smelting and refining.
But from there it just gets sold into the market, ending up anywhere from Asia to Europe or the U.S.
for use in stainless steel or batteries.
And while there are plans for domestic nickel refineries in development, the U.S.
currently doesn't have any.
So even if Tamarack is operational by 2026, that nickel still might get shipped around the world before ending up in American EVs.
But while Tamarack won't solve all the complexities of the nickel supply chain, every additional nickel mine could help EV makers like Tesla meet
their production targets, as Musk has previously stated, that nickel is his biggest concern when it comes to scaling up lithium-ion battery
production. Talon is particularly excited about the Tamarack Project because the nickel is so high-grade, which means it's less expensive,
energy intensive and wasteful to process.
Some of our grades, we've seen up to 12% nickel, which globally is very high, some of the highest grades I've ever seen in my career.
Though there are other areas with rich nickel sulfide deposits, particularly in Canada, Beveridge says that the high cost of sulfide mining
as compared to laterite mining makes companies hesitant to invest in new projects.
The pipeline of sulfide projects has dwindled and now we're in a situation where, you know, there's essentially not that much
there.
But he predicts that Talon's supply deal with Tesla will make banks much more likely to finance the Tamarack Project.
So it's a means, it's an indirect means of incentivizing that project.
By guaranteeing demand for a product, you make that that project look far more attractive in terms of, from a finance perspective.
Talon's development partner, mining giant Rio Tinto, is also exploring how it could sequester carbon onsite by injecting captured CO2 into the
surrounding rocks, permanently storing it underground.
The rocks that we have here at Tamarack are chemically amenable to turning that CO2 into a carbon mineral and
essentially locking it underground as a mineral, as a stable form for eternity.
Rio Tinto and the Department of Energy have funded a total of $6.2 million to study that at Tamarack.
While it's very much still in the exploratory phase, carbon sequestration could effectively make Talon's operations carbon neutral or even negative,
or help to offset the emissions from other industries.
But concerns over sulfide mining's impact on surrounding waters persist, especially in Minnesota, where lawsuits have kept a different proposed
copper-sulfide mine stuck in the environmental review and permitting process for the last 17 years.
Paula Maccabee, an attorney for the environmental group WaterLegacy, has been a plaintiff in a number of these lawsuits, and she has similar worries
regarding the Tamarack Project.
There are a lot of community meetings and a lot of public relations, but when the community has asked, "Where is your hydrology evidence of where
the pollution would go from Talon into the drinking water and into the surface water?" they have received no information whatsoever.
Talon hopes to start the environmental review process by the end of this year or early next year, at which point the public will have access to the
information that Maccabee wants.
But she's concerned that unless all the data is released up front, regulators and the public will prematurely support the project.
I don't want people thinking this is a commitment, this is a done deal when none of the important environmental and health information
has even been looked at.
It's also no guarantee that Tesla will even end up sourcing nickel from Tamarack, because it can walk away from the deal if the mine isn't up and
running by 2026.
And that's an ambitious target.
It was a good deal earlier than would be possible, feasible in our view, for permitting approval and construction.
Gardner thinks it's likely that the deal won't pan out, but he believes battery recycling, as opposed to mining, could provide a more fruitful and
sustainable supply of nickel anyway, pointing to battery recycling companies like Li-Cycle, which has a partnership with General Motors and is
also building out a domestic nickel refinery in Rochester, New York, and Redwood Materials, which is partnering with Ford, Volvo, Nissan and
Panasonic, Tesla's battery supplier.
There are at least five or six companies within the usA alone, each of whom have their own proprietary technologies, but they will give the end
result of nickel sulfate or a precursor and cathode active material ready-made within the USA.
I can see that coming out by the middle of this decade.
Will it be sufficient to cover off total EV demand?
I doubt it, but it is in tandem with the traditional technologies that are available and used today.
That is, even as battery recycling ramps up and gets cheaper, mining for nickel is still going to be a part of the equation.
Today, it's usually the more economical option, though as surging EV demand drives up prices for battery minerals, recycling will become more
cost-competitive. Plus, Gardner says that recycling plants can be built and scaled much more quickly than the average mine.
You're looking at 8 to 10 to 12 years before a new mine can be developed in a lot of countries, and we just don't have that time.
No amount of capital can create new nickel mines by 2024.
And yet just last week, what did Ford say?
Ford said that it plans to increase the number of EVs it has in production on an annual basis to 2 million per year by
2026.
I see a lot more joint ventures between the automakers and the cell manufacturers and cell recyclers.
I see those coming on within the next four or five years and that would provide them with an awful lot of their nickel units required.
And in a much more sustainable way.
Wood Mackenzie predicts that global demand for refined nickel will grow from about 3 million metric tonnes in 2022 to about 5.8 million metric
tonnes by 2040, driven by the EV battery sector.
Taking into account the exhaustion of current reserves, new mining projects and the role of battery recycling, Wood Mackenzie forecasts a
shortfall of 1.8 million metric tonnes of nickel.
So while Beveridge imagines that many EV-makers will be interested in sourcing nickel from the less carbon-intensive sulfide mines, there's just
not enough supply there to go around.
Everybody's going to want to source their units from Canada and Australia.
Not everybody is going to be able to do that, because there's simply a limited amount of units out there.
So then it comes back to economics, I think.
That is to say, laterite mines are cheaper and they're the ones that are expanding right now, especially in Indonesia.
Beveridge believes that building more sulfide mines could require automakers to enter into risk-sharing agreements with miners.
And that might not happen unless there's actually legislation to incentivize greener mining practices.
You'll really look to see a change when some concrete measures come into place which, let's say, potentially penalize an OEM
for using a material in their supply chain that is particularly carbon intensive, let's say.
And while mining of any sort often faces backlash in the communities that it affects, Talon says that mining technology has come a long way in the
past few decades.
I think that there's a really negative stigma associated with mining in general, but this is the 21st century.
We've got to be able to do this right.
And I think that we have a really good opportunity here to show people just how you can protect the environment and protect the water quality.
But if Talon does face community pushback and delays during its environmental review, that could end up voiding its deal with Tesla.
Overall, the controversy and the costs surrounding new mines are a reason why many are more excited by alternatives.
WaterLegacy doesn't have a position that there should never be a sulfide mine.
We do believe that we should be looking at things holistically.
Are there things we can do in terms of lesser consumption, greater efficiency, greater recycling, in addition to mining.
As is so often the case, it's not an either or situation.
It's likely going to take more recycling, combined with more nickel mining to ramp up lithium-ion battery production in tandem with EV demand.
It remains to be seen how great a role each technology will ultimately play in the nickel supply chain, but if Tamarack does prove to be
environmentally safe, it could definitely be a part of the solution.
I'd like for our teams to be able to say that we found it.
We developed it. We have contributed to environmentally friendly, socially responsible metals and that it's driving our vehicles and that metals are
going to be recycled into the next battery, into the next battery.
So I'll be long gone and these metals will still be alive.