Brazil

• Brazil's leftist ex-president Luiz Inácio Lula da Silva (aka Lula) narrowly won yesterday's runoff against right-wing incumbent Jair Bolsonaro, despite reports that Bolsonaro supporters tried to spook Lula voters away from polls.
• It's the first time a Brazilian president has tried and failed to win reelection, but not too surprising: Bolsonaro alienated voters with his catastrophic COVID policies and witch hunts against environmentalists.
• He hasn't conceded yet, and a minority of his most ardent supporters are calling for a military coup to keep him in office.

Ukraine

• Turkey and the UN are trying to coax Russia into reengaging the grain deal Moscow canceled on Saturday in anger over alleged Ukrainian strikes on its Black Sea fleet. If the deal is not revived, we'll likely see grain prices spike again (Chicago wheat futures are already up 5%).
• Russia has also escalated its missile strikes on Kyiv and other Ukrainian cities since Saturday, and Ukraine criticized its targeting: "instead of fighting on the battlefield, Russia fights civilians."

Iran

• Iran's Revolutionary Guard warned protesters to stop their demonstrations on Saturday, but they continued to gather yesterday, and violent clashes broke out as security forces sought to scare the demonstrators into retreat.
• Analysts say the regime is still dithering on an overall strategy to quell the protests, and security personnel - wary of coming across as monsters - are demanding double pay to crack down on a movement they may not entirely disagree with.

Afghanistan

• A new report from data company Alcis shows that prices for Afghan opium and meth have risen substantially, even though the Taliban hasn't been particularly vigilant in enforcing its ban on the trade.
• Opium prices are up about 50% - seemingly on the threat of a future crackdown on the drug trade, rather than actual enforcement efforts.
• One analyst doesn't think the Taliban will have the political will to enforce the ban: "It’s actually risky for the Taliban to enforce it. It means less revenues, less popularity, which might be more critical to the survival of the regime than just pleasing the international community."

Strategic Minerals

• The Financial Times reports that Tesla has been in lengthy talks about buying 10-20% of mining giant Glencore in a play to secure raw material supplies - especially those of cobalt and lithium (which Glencore doesn't mine but trades). It would be the first direct investment in a mining major by a big car company. An article pasted below has more.

Tesla held discussions over taking stake in Glencore (FT)
Talks over buying up to 20 per cent of miner reflect carmakers’ concerns over supplies of battery metals

Tesla held talks with Glencore about taking a stake in the Swiss commodities group, in a sign of how global carmakers are seeking to build ties with the mining industry to secure materials needed for the rollout of electric vehicles.

Preliminary discussions about Elon Musk’s electric car and battery maker buying 10-20 per cent of Glencore began last year, according to two people familiar with the matter.

They continued in March this year, when Glencore chief executive Gary Nagle visited Tesla’s factory in Fremont, California as part of a roadshow for the mining company’s annual results.

However, the discussions ended with no deal reached, according to the two people. Tesla had concerns over whether Glencore’s extensive coal mining business was compatible with the carmaker’s environmental goals, and was reluctant to take a minority equity stake.

The rise of electric vehicles has prompted concern among carmakers and battery makers about securing supplies of raw materials such as cobalt, lithium, and nickel that are needed to manufacture batteries.

Glencore is the world’s largest listed trading house and biggest producer of cobalt through its mines in the Democratic Republic of Congo, Australia and Canada. Two years ago Tesla secured a cobalt offtake agreement with the Swiss group to supply its factories in Shanghai and Berlin.

Musk has previously outlined Tesla’s intention to take greater control of all manufacturing steps of its batteries, including processing the raw materials and even buying lithium deposits still in the ground, if the supply chain fails to deliver.

In April, the billionaire took to Twitter, the social media site he bought this week, to voice his concerns about lithium costs: “Tesla might actually have to get into the mining & refining directly at scale, unless costs improve”. The price of lithium has risen eightfold since the start of 2021,

Tesla is also advancing with plans to build its own lithium hydroxide refinery on the Texas Gulf Coast.

Glencore produces cobalt, nickel, copper and other minerals, and is also one of the world’s largest recyclers of batteries. It does not mine lithium but recently started to trade the metal.

Analysts have been broadly sceptical over whether Musk has the appetite to invest in mining groups or trading houses, suggesting his comments have largely been intended to jolt raw material suppliers into increasing output.

As electric vehicle manufacturing increases, carmakers are scouring the globe to secure the raw materials they need, triggering a flurry of offtake agreements — multiyear deals to supply raw materials.

Glencore already has cobalt offtake agreements with battery makers SK Innovation and Samsung SDI, and carmakers BMW and GM.

As well as its cobalt offtake agreement with Glencore, Tesla has struck a long-term deal for nickel supply from Brazilian mining group Vale.

Ford has a lithium offtake agreement with Australia-based Liontown Resources that includes stumping up financing for the project upfront, and has taken a minority stake in a nickel ore processing plant in Indonesia.

Carmakers Stellantis, formed by the merger of Jeep owner Fiat Chrysler and Peugeot owner PSA last year, and General Motors have invested in early-stage mining groups.

However, big car groups have so far been reluctant to take direct stakes in mining majors. Many in the industry believe that more ambitious investments will eventually follow.

Tesla did not respond to a request for comment. Glencore declined to comment.