Disruptive Discoveries Journal

Cobalt

What Tesla's Gigafactory Means for the Juniors

Chris Berry
  • Tesla Motors (TSLA:NYSE) recent announcement to build its own vertically integrated lithium ion battery factory (dubbed the Gigafactory) sent the share prices of many junior mining companies into the stratosphere

  • There are a number of questions to consider behind TSLA’s strategy, but with respect to the junior mining sector, one wonders if this is a lifeline or a false dawn

  • Though lithium and graphite plays have benefited the most from the TSLA announcement, there are a host of metals which will be required to manufacture the specific battery chemistry

  •  It was interesting to note that cobalt or nickel plays didn’t react in the same way lithium plays did after the announcement

  •  It is dangerous for a junior mining company (or an investor) to assume that a major manufacturer like TSLA will rely on a junior not yet in production to feed the eventual Gigafactory supply chain

  • The success or failure of the Gigafactory rests less with a secure supply of raw materials and more with the long term price of a gallon of gas