Graphite One's US Asset The Logical Candidate For Tesla’s Raw Material Needs

VANCOUVER, BC / ACCESSWIRE / September 8, 2014 / With details recently announced on the Tesla (TSLA:NASDAQ) giga-factory, we now know Nevada is to be the host location for lithium-ion battery production, scheduled to open in 2017.

Clearly they want to move fast. According to Tesla co-founder Elon Musk, the deal wasn't done because of $1.8B in tax incentives but rather the state’s agility and ability to "get things done" as reasons behind the company’s choice. He also recently stated that the company "plans to use only raw materials sourced in North America for its U.S. battery factory."

Tesla intends to produce enough batteries to power 500,000 vehicles annually by the end of the decade and is expected to be the largest and lowest cost producer of lithium-ion batteries in the world. To do this, they will need to find a source of natural graphite to replace the highly expensive synthetic alternative. And they’ll once again need to act quick to ensure the supply is ready in time.

Respected industry insider Industrial Minerals put forward calculations of the new factory consuming a minimum of 28,000 tonnes of spherical graphite every year if operating at capacity, equating to 93,000 tonnes of flake graphite. This will more than double today’s demand for graphite.

Tesla, without question, is going to need to secure a long term, consistent supply of graphite to feed the gigafactory beast.

Where they decide to secure supply from will come down to the production and transportation costs, but of utmost importance is being able to secure a very consistent high quality graphite for a very, very long time. They need to know that the graphite they buy now is going to be the same quality and consistency in 100 years from now, to ensure quality and consistency of their batteries for their customers.

One US graphite deposit, stands out as the obvious candidate for meeting their requirements.

Graphite One’s (GPH:TSXv, GPHOF:OTCQX) flagship asset, Graphite Creek is the largest known, highest grade, large flake graphite deposit in the United States.

Its potential 100+ year mine life is currently 4 times larger than any other graphite deposit in North America. It has direct ocean access to the western seaboard and the Pacific Rim making logistics into Nevada uncomplicated.

A key part of Tesla’s ability to manufacturer high-quality lithium batteries is naturally tied directly to reliable suppliers that can guarantee the grade and consistency of graphite. A US $5B investment is a long-term project that will need long-term supplier relationships to succeed. Additionally, the project is an American vision and creating lasting partnerships with North American suppliers would allow Tesla to achieve the logistic and cost-efficient standard that it requires.

One would potentially foresee a company as patriotic as Tesla, to source their graphite supply from an American asset for its graphite needs.

Tesla Motors Inc. currently has a market cap of US$34.57B with shares trading at US$277.39.

SOURCE: Resource Reports