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Tesla is reportedly contemplating buying Sigma Lithium, a Brazillian lithium mining firm, for an estimated $3 billion.
Tesla and its CEO Elon Musk have proven a continued curiosity in the extraction and refinement of lithium over the previous 5 years. With the corporate’s exponentially rising demand for the substance, and its alacrity to vertically combine, a company buy of a lithium miner definitely is inside its MO. However now, Tesla could also be nearer than ever to such a purchase order, as Bloomberg studies that the automaker is exploring buying Sigma Lithium for $3 billion.
Sigma Lithium is likely one of the largest lithium extractors in South America, thanks largely to what the corporate calls “the most important arduous rock lithium deposit within the Americas.” Situated within the South Japanese State of Minas Genrias, the large mining operation has been in operation since 2018. Importantly to Tesla, Sigma’s proximity to the Atlantic coast means its extracted lithium can simply be shipped throughout the globe.
Simga Lithium has not responded to Teslarati or Bloomberg relating to the potential sale, and representatives of Tesla CEO Elon Musk refused to remark to Bloomberg on what they referred to as “rumors.”
Following the leak in info, shares of Sigma Lithium on the NASDAQ exploded by greater than 25% in after-market buying and selling.
What makes the Sigma acquisition doubtlessly extremely engaging to Tesla, apart from its proximity to the coast, is its development potential. In keeping with Sigma Lithium’s web site, it plans to extend output to 270,000 metric tonnes of lithium yearly, with the extra distant objective of manufacturing 766,000 metric tonnes of lithium yearly within the coming years. Moreover, with a close-by considerable provide of water and hydropower on the Jequitinhonha River, the operation can obtain this development at a decrease price than different operations.
With the acquisition of Sigma Lithium, Tesla would solely be a few steps away from a very vertically built-in lithium provide chain. Tesla already produces its personal battery cells, and with an upcoming lithium refining facility in Corpus Christi, Texas, uncooked lithium from Sigma’s operation in Brazil might assist the automaker proceed to tame battery prices.
With Tesla’s revenue margins changing into the envy of the auto business, we might even see an ever-increasing variety of automakers transferring into lithium extraction and refining. Nevertheless, with the experience and property holdings that mining firms at the moment possess, this transfer might come on the astronomical price of a company acquisition. It stays unclear if different automakers will comply with in Tesla’s footsteps.
William is a shareholder in Tesla however doesn’t management any shares of Sigma Lithium or its subsidiaries.
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