BHP responds to Elon Musk’s call for more nickel, as miners wake up to EV market

Australian resources giant BHP may finally be starting to establish itself as a primary supplier of materials to the battery and electric vehicle markets, confirming that it has started to boost nickel production after Tesla CEO Elon Musk issued a call out for miners to ramp up output of the key material used in the company’s batteries.

Speaking at the Diggers and Dealers forum in Kalgoorlie on Tuesday, asset president for BHP’s Nickle West subsidiary, Eduard Haegel, said calls by Tesla’s Elon Musk for more nickel production highlighted the scale of opportunity being created by the clean energy sector for materials, but stopped short of confirming that BHP had finalised a nickel supply deal with Tesla.

“At Tesla’s recent battery day, Elon Musk flagged the enormous demand that will come for nickel as this decade unfolds,” Haegel told the forum. “His call for nickel miners to grow quickly offers real evidence of the place nickel has as a strategic battery metal going forward.”

“Nickel West is well positioned to benefit from this anticipated growth. Last year, we sold around 70 per cent of our nickel to battery manufacturers around the world, making BHP one of the world’s leading battery metal suppliers.”

As reported by the AFR, BHP and Tesla have been in active negotiations over a potential nickel supply deal. It wouldn’t be the first time that Tesla has turned to Australia for the raw materials used to produce the company’s battery and electric vehicle technologies, with Musk confirming via Twitter that the company already sources lithium from Australia.

BHP has previously flagged that there are growing opportunities for the Australian resources sector to undergo a second boom, driven by demand for resources like lithium, nickel, copper and cobalt, all used in electric vehicles, as demand for coal and gas is projected to fall. BHP is currently dealing with Chinese coal customers that have cancelled or deferred purchases of coal.

Analysts Bloomberg New Energy Finance has predicted that global demand for the metals are expected to increase by orders of magnitude, with the global market for battery materials set to grow to a US$75 billion (A$105 billion) market by 2030.

Other Australian miners have sought to expand their involvement in the production of raw materials for the clean energy sector, including an expansion by Rio Tinto of its production of copper and lithium, and Australian lithium producer Piedmont Lithium, has already secured a deal to supply Tesla.

During the recent ‘battery day’ event held by Tesla, Musk called on resources companies to increase their nickel production, to meet the anticipated demand being created by strong growth in battery production for both electric vehicles and energy storage systems.

“I’d just like to re-emphasise, any mining companies out there, please mine more nickel,” Musk told the battery day event.

“Wherever you are in the world, please mine more nickel and don’t wait for nickel to go back to some high point that you experienced some five years ago. Go for efficiency and environmentally-friendly nickel mining at high volume.”

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Musk added.

Musk told the event that Tesla was aiming to improve its battery technologies setting targets to reduce manufacturing costs by 56 per cent, and deliver an increase in electric vehicle range of 54 per cent.

Musk has previously said that ‘nickel is the biggest challenge for high-volume, long-range batteries’.

Haegel said that BHP Nickel West would make substantial investments towards upgrading its nickel production and processing facilities, to increase its own supplies and that the company was well positioned to capitalise on the growth in nickel, which is a key ingredient in lithium-ion batteries.

Haegel said that the company was currently considering options for a replacement for its nickel smelter in Kalgoorlie, which is now more than 50 years old, as the company aims to sell into a growing global battery market.

It marks an acknowledgement from the resources giant of the future opportunities being created in the clean energy sector, allowing the nickel subsidiary to pivot from producing nickel for stainless steel production to supplying the material to companies like Tesla.

“In our central energy view, we expect to see the accumulative demand over the next few years is 250 per cent of that of the past 30 years,” Haegel said. “Nickel is a standout winner from a decarbonising world. It secures this position because no matter what metals (or combination of metals) are tested in lithium-ion battery cathodes, nickel produces the highest energy density of any.

“This is an insight for why nickel has such a positive future. It is the workhorse of the lithium ion battery.”

Australia has the world’s largest reserves of nickel ore, and ranks within the top five countries in terms of nickel production and exports.

The Western Australian government has sought to support the emergence of a clean energy focused resources sector within the state, having identified that it holds deposits of almost all of the materials needed to produce lithium-ion batteries.

An assessment commissioned by the Western Australian government estimated that the global market for lithium-ion batteries would grow to $136 billion by 2030.