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Tesla inks deal to get component outside China

LONDON — Tesla is turning to Mozambique for a key component in its electric car batteries in what analysts believe is a first-of-its-kind deal designed to reduce its dependence on China for graphite.

Elon Musk’s company signed an agreement last month with Australia’s Syrah Resources, which operates one of the world’s largest graphite mines in the southern African country. It’s a unique partnership between an electric vehicle manufacturer and a producer of the mineral that is critical for lithium-ion batteries. The value of the deal hasn’t been released.

Tesla will buy the material from the company’s processing plant in Vidalia, La., which sources graphite from its mine in Balama, Mozambique. The Austin, Texas-based electric automaker plans to buy up 80% of what the plant produces — 8,000 tons of graphite per year — starting in 2025, according to the agreement. Syrah must prove the material meets Tesla’s standards.

The deal with Syrah is part of a broader effort by automakers to secure relatively scarce raw materials for batteries as demand for electric vehicles is expected to grow, said Sam Abuelsamid, principal e-mobility analyst for Guidehouse Insights.

The deal also brings the graphite processed in Louisiana much closer to Tesla’s U.S. factories.

“The pandemic pointed out to us that we’ve got these long, long, long supply chains, and it doesn’t take much to disrupt a supply chain,” said Donald Sadoway, a professor of materials chemistry at the Massachusetts Institute of Technology. “Somebody could all of the sudden say, ‘We’re going to jack up the prices,’ or ‘We’re going to refuse to ship it.’”

It’s unlikely that the Tesla deal with Syrah will rankle the Chinese government because China has plenty of markets for its graphite, Abuelsamid said.