ALEXANDRIA, Va.—Tesla is attempting to make the nickel used in its electric vehicle (EV) batteries more environmentally friendly by signing a deal with Talon Metals, reports Reuters. The EV company will receive nickel supply from Talon Metal’s Tamarack mine project in Minnesota, which is a joint venture with Rio Tinto slated to open by 2026.

The Tamarack mine project uses technology that chemically binds carbon dioxide and therefore permanently stores it in rocks found inside its project in northern Minnesota. The process would effectively let Talon market nickel as carbon neutral.

Indonesia is the world’s largest producer of nickel, but the process to extract the metal uses large amount of energy, and there are controversial waste disposal practices happening, including dumping waste rock in waterways.

Over the next six years, Tesla plans to buy 75,000 metric tons of nickel concentrate, as well as smaller amounts of cobalt and iron ore. Reuters reports that it is not immediately clear where Tesla will refine the nickel concentrate, as the U.S. does not have a nickel refinery.

Global supply-chain issues relating to the batteries and the minerals needed to produce them will only increase as countries, including the United States, move toward electrification of our transportation system, according to a recent Climate Corner article in NACS Magazine. Though EV batteries can last 10 years, or about 150,000 miles, until they need to be replaced, battery manufacturers are struggling to secure supplies of key ingredients to these large power packs, especially cobalt and lithium.

Demand for cobalt and nickel could exceed production in less than a decade, according to several studies. Cobalt has the most supply risks, as it has a highly concentrated production and limited reserves. There are not many producers of cobalt, with a single company producing one-third of the world’s annual supply, and 65% of cobalt coming from a single country.

In the U.S. alone, the amount of lithium, cobalt and battery-grade nickel needed to electrify every light-duty vehicle on the road surpasses the total amount of these resources mined globally in 2019, according to a report on supply-chain vulnerabilities.

Another issue with EV batteries is the process of recycling or disposing of them. Lithium-ion batteries, which are EV batteries, are toxic and can catch fire and spread quickly—a danger that runs especially high when they are stored together.

It’s difficult and expensive to extract the minerals out of the EV batteries to recycle them, involving shredding batteries, then breaking them down further with heat or chemicals at dedicated facilities. Moreover, it’s costly to transport the battery to the recycling facility, with transportation being about 40% of the overall cost of recycling because the EV battery packs are so large they need to be shipped by truck in specially designed cases, often across long distances.

Many times, the cost of recycling the battery exceeds sourcing a brand-new battery. Currently, the only battery material that can be recycled profitably is cobalt, because it’s just that rare and expensive.

U.S. President Joe Biden has created the Federal Consortium for Advanced Batteries, a cross-agency group headed by the U.S. Department of Energy, to identify the supply and technical challenges in EVs batteries and potential solutions. In addition, the Consortium has created a National Blueprint for Lithium Batteries to help guide the development of a domestic battery industry.