Elon Musk’s acquisition of Twitter is sending shock waves throughout the social media world. But what effects will his 43 billion dollar investment have on the rest of the Musk-China mega-mine empire?
Elon Musk financed about 50% of his controversial Twitter buyout deal with a timely Tesla stock sale. Can innovator Musk unlock Twitter value growth and use a similar Wall Street maneuver to finance the Musk mega-mines that are the key to Tesla’s survival?
In The Musk Effect Part 2 we’ll look at the mining companies in the US and around the world who may or may not answer Musk’s desperate plea for more battery metal mining. But for now let’s dig into the latest Musk maneuver of 2022.
The Musk Effect: Good News for Twitter Shareholders
Just the rumor of a Twitter take-over by the mighty “visionary” entrepreneur Elon Musk caused a 12% jump for Twitter shareholders. The undeniably savvy business mogul who brought PayPal, Tesla, SpaceX, and anything but Boring Tunnels to the world inspires investor confidence with a stellar track record of building his companies’ value with innovation.
Not that Twitter ever set the performance bar that high while operating under former CEO Jack Dorsey or soon to be former CEO Parag Agrawal.
The captain’s of disaster on the soon to be ousted Twitter board managed to scrape up a meager 19% gain for Twitter stock since its 2013 IPO debut. That paltry performance is even more in context when we observe that the rest of the economy was thriving with 260% growth over the same period of time. It’s no wonder that the entire crew of the Twitter Titanic board held little or no Twitter stock themselves.
Now Musk has all the board members walking the plank, and CEO Parag Agrawal has already allegedly gotten his walking papers, a termination that could cost Musk $42 million to execute the strategic sack. But given Musk’s track record of building value in the companies he runs, it could be $42 million well spent.
But while Musk’s Twitter takeover makes headlines, the world’s richest man needs to take care of his primary asset as prices for EV essential minerals threaten Tesla production.
Tesla Gigamines on Elon’s Mind Again as Lithium Spikes to $78,000/ton
Resource Erectors first reported on Elon’s megamine ambitions back in November 2020 in our blog post Could Musk’s Mine to Magnet Moves Lead to US Tesla Gigamines? Back then, the Tesla CEO was concerned about securing enough lithium for Tesla batteries when the price was just $6,800/ton. Now, just over 2 years later, Musk is feeling the pressure as forecasts from 2020 like the one below come to fruition:
“The World Bank forecasts that the rise of EVs and renewable energy will power a 500% increase in the annual demand for battery minerals over the next three decades.”-Metal Tech News
Musk, the would-be mining magnate, summed up the situation for Tesla’s battery mineral supply chain himself with a succinct tweet last April:
“Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve. There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.” 2:59 PM · Apr 8, 2022
“Insane” is not an understatement on Musk’s part. To put that horrendous price spike in context we only have to look back over the past 5 years to recognize that predicted increases in annual demand for “green battery minerals” is already having an impact.
Lithium price per ton According to World of Statistics:
- 2022: $78,032!
- 2021: $17,000
- 2020: $6,800
- 2019: $11,310
- 2018: $14,660
- 2017: $12,070
But lithium acquisition isn’t the only essential metal on Musk’s mining mind.
Musk Calls Nickel “the New Gold”
The term “lithium-ion” for Tesla EVs and the 4860 batteries for Panasonic and other green energy partner companies is actually a misnomer, as Musk pointed out himself back in 2020 in a news release from Tesla aftermarket accessory manufacturer EVANNEX.
“Although [they’re] called lithium-ion, the actual percentage of lithium in a lithium-ion cell is approximately 2%. Technically, our cells should be called ‘nickel-graphite’ because the primary constituent in the cell as a whole is nickel.”- Elon Musk- 2016 Tesla Shareholder Meeting
That makes nickel even more essential. While nickel prices haven’t spiked to the “insane” levels that lithium has recently, the average price per metric ton jumped by $5,000 from 2020 to 2021 to an average price of approximately $18,465 USD. At the time of this writing in May of 2022 the price of nickel was an impressive $32,424.00 according to the Real Time Quote at Market Insider, so by Elon’s standard even nickel is getting into “insane” price territory.
But Musk doesn’t want just any old nickel…yet. His open plea to the mining industry for precious nickel came with the usual appendage of “green giant” encumbrances to the scale of production that Musk’s “EV revolution” will consume.
“I’d just like to re-emphasise, any mining companies out there, please mine more nickel. Wherever you are in the world, please mine more nickel and go for efficiency, obviously environmentally-friendly nickel mining at high volume. Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally sensitive way.”
In other words, quadruple nickel production (and cobalt, and lithium) with the restricting green handcuffs firmly in place. Of course with Musk’s 89 million followers (and counting) on his newly acquired private Twitter platform, the updated definition of “environmentally sensitive” is now certainly up for debate. In any case, the red tape of the “green giant agenda” doesn’t have quite as much sway over local supply chains in China, where Tesla’s main megafactory has replaced the California facility as the primary Tesla EV producer.
The Musk Effect Part 2 Preview
Then there’s the Russian question, and Musk’s relationship with Norilsk and a look at what other mining companies are poised to take advantage of the coming nickel/lithium/cobalt rush as prices go “insane” as characterized by our man Elon.
The number-two nickel producer in the large cap major players category is Norilsk. and they’re based in Russia.
Wouldn’t it be ironic if Elon was forced to buy his nickel with Putin’s petro-roubles? Or will North American mining players in British Columbia and Minnesota put their cards on the battery metals table?
Stay tuned for The Musk Effect Part 2 right here at Resource Erectors.
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