Musk encounters "pig teammates": the supply of tens of thousands of tons of lithium ore has been postponed indefinitely

Last September, Tesla CEO Musk proudly announced that he would produce lithium electricity at Battery Day, and a few days later signed a five-year lithium supply contract with Australian lithium miner Piedmont (Piedmont). The news almost immediately spurred Piedmont's share price to soar several times.

Musk's vision is good: Piedmont owns a huge lithium mine in North Carolina, and when completed, the mine will become the largest lithium project in the United States and can supply 53000 tons of lithium concentrate to Tesla. Tesla will build a lithium smelter near the Texas super factory to refine the lithium concentrate into lithium hydroxide for battery production to solve Tesla's shortage of lithium power.

Nearly a year later, however, Piedmont's lithium mine project in North Carolina has made no progress. Last week, Piedmont announced that it would indefinitely delay the delivery of the first spodumene concentrate to Tesla, meaning that Musk's ambition to produce lithium electricity was poured cold water on the first step.

The trouble caused by the company's "procrastination"

According to the original agreement, Piedmont was supposed to deliver the first shipment between July 2022 and July 2023. But Piedmont now faces an awkward dilemma-local approvals cannot be done.

However, the problem can not be blamed for the strict approval of the local government, it is all the fault of Piedmont himself.

As early as September 2018, Piedmont disclosed to investors that the company would apply for a mining license in local Gaston County for the project, which is expected to be available in 2019. But in fact, the company has been slow to act.

In August 2019, executives said again that they "expect to get permission in the next few months". But it turned out to be empty talk.

The explanation given by the company's executives seems innocent: they do not know the reason why the county committee did not approve it.

The Gaston county committee, which is responsible for approving the project, is angry. They said they specifically asked Piedmont to inform them of the possible dust, noise and vibration caused by the mining project, as well as the possible impact of the mining project on local water and air quality. but the company did not provide any relevant information at all.

In fact, the real reason for the company's delay in submitting applications may be the weak price of lithium ore in the past two years, so the company is in no hurry to apply for permission.

But the problem is that repeated delays have seriously worsened the relationship between the company and the local government, especially when Piedmont announced a high-profile cooperation agreement with Tesla last fall, which made county committee members feel even more incredible. The chairman of the county committee said bluntly: "Why did Piedmont reach an agreement with Tesla before the mine was approved?" This is completely putting the cart before the horse. "

At present, five of the seven members of the county committee responsible for approving the project have publicly indicated that they will reject or postpone the project, and one of them said bluntly: "I have never seen a company start a project so badly."

News of the impasse in the mining project also triggered a plunge in the company's share price of more than 20% in July, followed by a class action lawsuit by investors, accusing executives of misleading investors about the project development timetable.

The date of mine approval is a long way off.

In July, the first meeting between Piedmont and the county council finally came long overdue. At the online meeting, Piedmont CEO Phillips finally introduced the details of the lithium mine project to the county committee members for the first time and sincerely apologized, saying bluntly that it was "all my fault" that he did not maintain a good relationship with the community.

However, the county council may still be unconvinced, because Piedmont has been in conflict with some local residents in the process of land expansion in western Gaston County over the past two or three years.

Some residents complained that Piedmont made them angry by trying to force them to buy land through threats. In addition, the possible noise pollution caused by the Piedmont mine also worries local residents. By the end of July, more than 1500 local people had signed a petition asking officials to stop the mine project.

On August 6, the county committee adopted a resolution saying that the company "cannot take sufficient measures to protect the health, safety and welfare of its citizens and cannot be trusted." At the same time, the county committee also issued a 60-day mining ban, during which time the county committee will review local industry regulations.

As a result, Piedmont had to announce that the delivery of lithium ore to Tesla could only be postponed indefinitely.

On Monday, Piedmont CEO said it was conducting a final feasibility study on its lithium business in the region, which is expected to be completed in the second half of this year. The company CEO stressed in the announcement: "the resolution of the Gaston county committee is not intended to stop mining, but to give the county time for transfer and review." We look forward to more contacts with the county committee on its commitment to promote environmental protection and economic prosperity in the county. "

However, North Carolina officials expect the review to last more than a year. And even if the company gets the permit, it will have to apply to the North Carolina government for "rezoning" and other procedures after that before the mine can start construction. It often takes more than a year and a half for a lithium mine to go into production-which means it may be a long way off.