HELSINKI, Nov 10 (Reuters) – Finland’s Terrafame nickel mine is planning to start producing material for electric vehicle batteries by 2020, the company said on Friday, after securing $200 million more in funding from commodities trader Trafigura Group.

Trafigura, which will also increase its nickel and cobalt sulphides offtake agreement with Terraframe, is providing the funds with Galena Asset Management and Nordic fund Sampo Plc.

“The new funding package … is a significant factor enabling Terrafame to move from established industrial operations to investing in new business opportunities associated with the electric vehicle battery segment,” Trafigura said in a statement on Friday.

With the electric vehicle revolution gaining speed, miners and metals traders are racing to shore up supply deals with battery makers. This deal will help Trafigura compete on the trading side with rival mining and trading giant Glencore that already dominates cobalt supplies with its assets in the Democratic Republic of Congo.

Terraframe, formerly known as Talvivaara, has been under government control since 2015 after years of losses and production problems. It returned to profit last year and commodities trader Trafigura agreed in February to take a stake and help to ramp up production.

Terrafame said it plans to build a new chemical plant by 2020, which would convert nickel into a valuable form of sulphate, a powder-like substance particularly suited for use in batteries.

Most electric vehicles rely on lithium-ion batteries, with the main component comprised mostly of nickel.

Lithium batteries, which keep a charge over longer distances, are being installed in electric cars from Tesla’s top-of-the-line Model X to General Motors’ more modestly priced Chevy Bolt.

“The availability of nickel and cobalt is critical for the electric vehicles market to continue developing. As a producer of these metals, Terrafame is aiming to take a leading role in supplying battery manufacturers,” Terrafame CEO Joni Lukkaroinen said in a statement.

The new plant would have annual capacity of about 150,000 tonnes of nickel sulphate, which Terrafame said would make it one of the largest producers globally.

The company said it expects to make a final decision on the investment in the first half of 2018.

Trafigura added in its statement that it will market all of Terraframe’s forthcoming nickel and cobalt products until end 2027. The trader already takes all of Terraframe’s existing output of nickel and cobalt sulphides.

Trafigura added it has extended its current offtake agreement for 80 percent of Terraframe’s zinc sulphide precipitates until end 2027.

(Reporting by Tuomas Forsell in Helsinki and Julia Payne in London; Editing by David Goodman and David Evans).

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