Tesla Motors, Inc. TSLA is planning to join forces with Chilean state copper miner Codelco to buy Lithium, according to sources. Tesla’s officials visited the country for a meeting with government authorities about a potential tie-up. If an agreement is reached, Codelco will supply lithium to the automaker.
Lithium is an essential ingredient in the electric car batteries used in Tesla’s vehicles. There are huge deposits of lithium in Chile, Bolivia and Argentina. However, a formal process of exploration for lithium has not been initiated. Also, Codelco’s board is yet to take a decision related to the agreement.
Codelco is the world’s leading producer of copper. The company also has small-scale operations in deposits like silver. However, the company is currently not involved in the lithium business. However, it stated that a good business opportunity would lead it to consider entering the lithium industry.
Since copper prices have hit a six-year low, this new venture may be profitable for the company. Nonetheless, the lithium industry is relatively small in size, which poses a concern for Codelco.
Other companies, including Chile-based Li3 Energy Inc, are reportedly interested in partnerships to purchase lithium from Chile.
Currently, Tesla carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include General Motors Company GM, CarMax Inc. KMX and Fox Factory Holding Corp FOXF. All these stocks carry a Zacks Rank #2 (Buy).
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