The former head of Tesla’s Australian operations has pleaded guilty to insider trading after buying shares in a lithium producer based on knowledge that the electric carmaker had a supply agreement with them, according to the country’s securities regulator.
The Australian Securities & Investments Commission said on Wednesday that Kurt Schlosser, the former Australia director for Tesla, acquired 86,478 shares in Piedmont Lithium after receiving inside information about a supply agreement between the two groups.
Schlosser subsequently sold shares in Piedmont for a net profit of A$28,884 ($19,583) after the lithium producer’s share price shot up when news of the supply agreement with Tesla was made public.
Schlosser also shared the information with a friend who would be likely to buy shares in the now North Carolina-based mining group, the watchdog said.
Piedmont Lithium announced in September 2020 that it had entered a binding five-year agreement to supply Tesla with a third of its planned 160,000 tonnes per year production of spodumene concentrate, a hard rock ore product that is converted into battery-grade lithium chemicals. The deal sent its shares six times higher.
The agreement was one of the many that carmakers have signed directly with mining groups. For carmakers, it helps to secure access to raw materials, bring down procurement costs and have greater oversight over the environmental and social impact of their supply chain.
For early-stage mining groups such as Piedmont, the backing of a global car manufacturer can help to unlock financing from lenders and transform their fortunes.
The US mining group had aimed to deliver the concentrate between July 2022 and July 2023 for Tesla to process at a refinery it is building. However, last year it postponed deliveries to Tesla indefinitely because of delays in the permitting process for its mine in North Carolina.
Piedmont Lithium is dual-listed in Australia and the US. The company redomiciled from Australia to the US and changed its primary listing to New York last year.
Tesla and Piedmont Lithium did not respond to requests for comment.
Schlosser is yet to be sentenced and will appear at Sydney District Court on December 16. The ASIC said that the maximum penalty for insider trading violations was 15 years in prison.
Additional reporting by Peter Campbell
