Goldman warns carmakers against buying miners: ‘It always end in tears’

Bloomberg News | March 1, 2023 | Lithium

Broken down Tesla on road side. Credit: Adobe Stock

Car manufacturers acquiring mining companies to secure raw materials needed for electric vehicle batteries will end badly if history is any guide, according to Goldman Sachs Group Inc.’s head of commodities.


History is littered with examples of consumers trying to move upstream in commodities markets, Goldman’s Jeff Currie said in an interview Wednesday with Bloomberg Radio.

“It always ends in tears,” he said. “Going in and being involved in mining projects in places like Southern Africa, it requires an expertise that is very different than producing cars.”

Currie was commenting in response to a question about the prospect of Tesla Inc. acquiring Sigma Lithium Corp. The electric-car maker has been mulling a takeover of the miner amid rampant demand for the material crucial to powering EVs, Bloomberg News reported last month, citing people with knowledge of the matter.

Automakers have been pushing into mining more aggressively to lock in supply for batteries that increasingly are replacing internal combustion engines. Stellantis NV took a 14% stake in a McEwen Mining Inc. copper subsidiary, and General Motors Co. is said to be vying for a stake in Vale SA’s base metals unit. In January, GM struck a $650 million pact with Lithium Americas Corp. to develop the top US lithium deposit.

Car companies will be better off sticking to their core competencies and reducing their exposure to commodity price swings through hedging, said Currie, who declined to comment on Tesla specifically.

(By James Attwood, with assistance from Caroline Hepker and Tom Mackenzie)