Nickel Worth a Dime for BHP and Tesla

Five years or so ago, BHP couldn’t find a buyer for its unwanted Nickel West assets in WA.

Nickel was old fashioned, a steel additive and not much else, it was a high cost, high priced commodity with few growth prospects – a bit like copper in fact.

But after deciding to keep it, spend money tarting and polishing the business (in the enduring hope of finding a buyer) BHP moved forward.

Suddenly as climate change moved beyond the idiotic political argy bargy in Australia – as well as a significant change among senior BHP directors and leadership – nickel and copper moved to become part of the company’s ‘green’ appeal.

Out went thermal coal (BHP is still trying to get rid of the NSW Energy Coal business) as well as the capital-hungry onshore shale gas business to BP at a written down (more than 50%) price.

And this week we learned that BHP is looking at the future of its petroleum division which was supposed to be a cornerstone asset.

Remaining as a cornerstone asset is nickel (for the benefit of BHP and Australia), along with iron ore, and possibly potash. Now BHP is rubbing elbows with the greenest of them all – Elon Musk, founder of Tesla cars and batteries, prospective astronaut – all because of the mineral BHP couldn’t get rid of.

In a statement overnight Wednesday, Tesla and BHP revealed a relationship built around nickel.

It was news that boosted the price of BHP shares by 3.1% to $51.45 and back to within sight of the all-time high of $51.91 it hit last Friday.

As a result, BHP will supply Tesla with nickel from its Nickel West assets in Western Australia in a collaboration which will aim to make the battery supply chain more sustainable.

The two companies will focus on establishing a supply chain that features end-to-end raw material traceability using blockchain – and there will not be any role for China.

The two will develop a technical exchange for battery raw materials production and promote the importance of sustainability in the resources sector, including identifying partners which are most aligned with their principles and battery value chains.

BHP will also work with Tesla on energy storage solutions to identify opportunities to lower carbon emissions in their respective operations through increased use of renewable energy paired with battery storage.

BHP chief commercial officer Vandita Pant said in the statement demand for nickel in batteries is estimated to grow by more than 500% over the next decade, in large part to support the world’s rising demand for electric vehicles.

Last month, Tesla chair Robyn Denholm revealed the company planned to spend more than $1 billion on Australia’s minerals supply to cater for growing electric vehicle (EV) demand.

There was no talk of tonnages, contracts or duration for the deal. But capitalising on China’s hectoring assaults and bans on Australia (and Australian resource companies and others), BHP has snagged a deal with one of the new tech icons in Tesla.

Nickel, though, was non-core, while copper was more favoured because of the luck of inheriting the prospect that became the huge Escondida copper mine in northern Chile from the Utah takeover in the 1980’s.

Escondida was developed into the world’s biggest copper mine, BHP lost hundreds of millions of dollars in trying to turn the Ravensthorpe lateritic nickel deposit into a major source of nickel as well.

It was left with the rump of the Western Mining nickel assets it picked up in the 2005 takeover of that company.

And despite this chequered background, and its reputation as a carbon emitter, BHP now finds itself on the cusp of becoming a favoured ‘green’ mining major’ for investors large and small around the world.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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