Tesla is considering making a bid to acquire Vancouver, Canada-based Sigma Lithium, a company that specializes in mining the critical electric vehicle (EV) battery metal in its name — reports Bloomberg.
According to the publication’s sources, Tesla has been in talks with potential advisers about a bid for Sigma Lithium. Shares in Sigma Lithium jumped more than 25% in aftermarket trading on the back of the rumors.
The news comes after Tesla CEO Elon Musk said in April of last year that Tesla might have to start mining and refining its own lithium at scale to keep production costs in check as the metal’s price continues to surge due to growing demand from the automotive sector.
“Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve,” Musk said at the time. Sigma is only one of several options Tesla is entertaining to secure its lithium supply, per sources.
People familiar with the matter said that the deliberations are still in the early stages and may not even lead to a deal. A successful bid becomes even more unlikely considering Sigma’s owners have a pretty high asking price.
Sigma’s owners could also wait to sell until the company further develops its main project, a large lithium rock deposit in Brazil known as “Grota do Cirilo.” The company previously said that it could triple lithium production at the project in 2024 after additional mineral reserves were discovered at the site.
Musk and Tesla did not respond to Bloomberg‘s requests for comment, while Sigma brushed reports of a potential sale to Tesla off as “rumors.”
The demand and supply gap for lithium is only growing, along with the metal’s price, as the world accelerates its transition to EVs, contributing to higher production costs. Back in 2021, Tesla filed a patent application for a new lithium extraction process that cuts costs by 33%.
