Nickel and Dime Stuff Key to BHP’s Future

Nickel still retains the affection of BHP which, three years after failing to sell its Nickel West business, now sees the metal as part of its future deeper involvement in renewables.

BHP has already spent hundreds of millions of dollars revamping its nickel mining, refining and smelting businesses and gone deeper into the production process with the spending of more than $100 million alone on a nickel sulphate product suitable for sale to electric battery and car companies at Kwinana, south of Perth.

Contracts with Tesla, Toyota, and last week, with Ford, have been signed as the company’s search for new sources of metal have taken it to Canada, other parts of Australia and Africa.

Now the company says it plans to boost nickel exploration spending (by an unstated amount) over the next two years with most of the extra money to be spent outlining deposits across the WA goldfields.

The plan will see BHP Nickel West’s exploration budget rise this year to its highest level since 2005.

Nickel West President Jessica Farrell, asset president at BHP Nickel West, says the company is in pole position with nickel a key component in EV batteries.

“We have a large nickel sulphide resource, with in excess of 7.4 million tonnes of nickel in the Agnew-Wiluna Belt, that still remains largely unexplored. That’s exciting,” Ms Farrell told the Diggers & Dealers mining conference in Kalgoorlie on Wednesday,

“We have budgeted a significant uplift in exploration spend over the next two years, which we expect will advance many of our targets,” Farrell told an industry conference in Kalgoorlie, without providing an investment number.

“This year will be the highest annual spend for exploration in Nickel West,” Farrell said.

Ms Farrell said its large reserves stem from the acquisition of tenements from Russian mining giant Norilsk Nickel when it left Australia in 2020.

Ms Farrell said BHP has 120,000 hectares within the Agnew-Wiluna belt in Western Australia.

“This is a highly prospective strip, approximately 150 km long … and has a number of deposits that we are looking to understand further and potentially mine,” said Ms Farrell.

“Our acquisition of the Honeymoon Well and Albion Downs tenements in 2020 continues to drive our growth plans and drilling to inform our mine studies.”

By 2030, around 60% of all car sales globally will be electric, increasing to 90% of all car sales by 2040, she said.

“The dominant battery chemistry powering this global fleet is expected to rely on nickel,” Farrell said.

“This megatrend, combined with a firm demand base from the traditional stainless and class-1 applications means we anticipate demand for nickel in the next 30 years will be 200% to 300% of demand in the previous 30 years,” she said.

BHP signed renewable wind and solar energy contracts with power companies this year, including a deal for wind power from Italy’s Enel Green Power, that is expected to cover energy needs of three of its major nickel operations in Western Australia by 2024.

Ms Farrell said BHP is also considering new thermal and renewable energy generation projects, while it is also investigating the possibility of using its nickel tailings waste to capture and store carbon.

BHP shares gained just 3 cents yesterday to end at $38.61.

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.

View more articles by Glenn Dyer →