The “Eastern Goldfields” in Western Australia cover an area that is roughly as large as Greece. Gold has been mined in the region for more than a century. The typically red soil hides many other treasures too, though, including cobalt and nickel, two raw materials which are of central importance for e-mobility. These are needed for the production of batteries. This is where Glencore comes into play: the raw materials giant operates the Murrin Murrin mine in the northeast of the Eastern Goldfields. It has been extracting nickel and cobalt ore in the open-pit method since 1998. Just how coveted the briquettes obtained in this process are is evident from the announcement by Glencore in mid-April of a multi-year cobalt supply agreement with General Motors. The US carmaker will use the raw material from the Australian mine in batteries that supply power to the Chevrolet Silverado EV, GMC HUMMER EV and Cadillac LYRIQ models. The deal brings General Motors closer to the goal of creating capacity for the construction of 1 million electric vehicles in North America by the end of 2025.
Among its reasons for the agreement Glencore also cited the commitment of both companies to create sustainable and resilient supply chains. That makes the deal an exemplar of the greater collaboration between the motor industry and the mining sector. This is exactly where a new tracker certificate from Leonteq fits in. The issuer has been on the hunt for companies which are successfully positioned on the supply chain for batteries. This has led to a basket containing six shares. Glencore has made it in, and not just because of the recent agreement with General Motors: based in Zug canton, the raw materials group is also on Tesla’s supplier list. The electric car pioneer sources nickel from the Murrin Murrin mine. Tesla revealed the battery supply chain in its “Impact Report 2021”.
How important a secure supply of nickel, cobalt and lithium is to the Texan group can be seen from a number of statements from CEO Elon Musk. The consummate businessman can now even conceive of taking a stake in a raw materials company. While this is still under consideration, Tesla has just struck another long-term supply agreement. The mining group Vale will supply the company in the USA with high-grade nickel (class 1) obtained from mines in Canada. “We are pleased to have the leading electric vehicle manufacturer Tesla among our customers,” said Deshnee Naidoo, Executive Vice President of Base Metals at Vale, commenting on the deal. The Brazilian industry giant has set itself the goal of generating 30% to 40% of its turnover in the nickel sector from the fast-growing electric vehicle industry.
Of course, lithium suppliers should not be left out of the basket. Among the companies included from this segment is Albemarle. The specialty chemicals group considers itself a leading provider of lithium and its derivatives. “We maintain the strongest vertical position in the industry, from raw material extraction to specialty product manufacturing,” the US company writes on its website. Albemarle supplies lithium bars, foils, rods and anodes in a huge range of sizes. The examples outlined indicate that while the basket only contains six companies, it offers enormous diversity. The tracker certificate on the Battery Supply Chain Basket allows investors to add the selection directly to their portfolio. The term is five years, which means there is sufficient time for this investment to unleash its full potential.
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