SYDNEY, AAP – Global miner BHP has lifted its estimates for nickel demand over the next decade amid its rising usage as a battery mineral and also outlined plans to expand its processing facilities in Western Australia.
The company now sees nickel demand rising faster than expected due to rapid growth in the adoption of electric vehicles, as governments commit to decarbonising their economies and signal clear end dates for combustion engines.
“We believe that over 2020 to 2030, overall nickel demand will grow at five per cent compound annual growth rate, and that nickel-in-battery demand will grow at a rate of 21 per cent CAGR,” BHP Nickel West president Eddy Haegel told the annual Diggers and Dealers conference on Tuesday.
Nickel is a key component for the cathodes of electric vehicle batteries.
BHP last month signed a nickel supply agreement with Tesla under which the electric car maker will source much of its requirements of the key battery mineral from the Nickel West operation.
Tesla said in June it will spend over $US1 billion a year on battery raw materials from Australia given the country’s reliable mining industry and responsible production practices. Tesla currently sources about 70 per cent of its lithium and a third of its nickel from Australia.
That demand has been driven by surging sales of electric vehicles. Tesla delivered more than 200,000 vehicles in April-June , for the first time in a quarterly period.
Overall, electric cars were expected to account for 25 per cent of all vehicle sale by 2030, Mr Haegel said.
In recent weeks, BHP has also bid for the Noront Resources high grade nickel project in Canada as part of its push into the sector.
“We have positioned ourselves to become a globally significant supplier to the battery sector and laying the foundations to create a sustainable business of scale,” Mr Haegel said.
BHP’s nickel division accounts for less than one per cent of its earnings, and the mining giant has previously made several attempts to sell its WA nickel operations.
But it decided in 2019 to hold on to the unit amid the positive outlook for battery materials and as electric vehicle sales took off.
The company is now expanding its operations to build on the rising demand for nickel.
It will add a concentrator at its Mount Keith processing plant to increase capacity by up to 50 per cent to 15 million tonnes per annum. It will also start production of nickel sulphate, which has higher margins than nickel metal – in the September quarter.
BHP has also lifted its resource base through the acquisition of the Honeymoon Well project and is constructing a new underground mine. The company last month agreed to build two solar farms and a battery storage system near the Mt Keith and Leinster operations in WA to reduce its emissions there.