A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California.
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In a statement on Thursday, BHP said one of its mines in Western Australia, Nickel West, will supply the world’s largest electric vehicle manufacturer with nickel, a key raw material used in EV batteries.
“Demand for nickel in batteries is estimated to grow by more than 500 percent over the next decade, largely to support rising demand for electric vehicles worldwide,” BHP Chief Commercial Officer Vandita Pant said in a statement.
BHP currently derives most of its revenue from iron ore, which is mainly used to make steel.
While there were no details on the deal amount, Tesla had said in June that it expects to spend more than $1 billion a year on battery raw materials from Australia, citing the country’s responsible manufacturing practices, Reuters said.
BHP claims to be one of the most sustainable nickel producers with the lowest CO2 emissions in the
The mining giant currently supplies 85% of its nickel to global battery material suppliers, according to its website. It is also nearing construction on a new plant that will produce nickel sulfate, a material used in the lithium-ion batteries that power electric vehicles, the website said.
Major miners will grow in the mining resources needed to decarbonize the global economy, Vivek Dhar, a Commonwealth Bank of Australia commodities analyst, told CNBC via email.
“EV batteries will certainly be critical and drive interest in copper and nickel in particular,” he said.
However, Peter O’Connor, metals and mining analyst at Shaw and Partners, was less optimistic about the overall nickel sector, in terms of room for new entrants to increase their market share.
He said the nickel market is still very small, with long-term sales of about $40 billion. In addition, in addition to BHP, there are other major big players already crowding the market, such as Brazil’s Vale and Russia’s Norilsk Nickel, he told CNBC on Thursday.
BHP is listed in Australia, New York and London.
MineLife senior resource analyst Gavin Wendt told CNBC earlier this week that he has a 12-month price target of USD 60 ($44) on BHP, which is currently USD 51.40. His comments came before the nickel supply deal with Tesla was announced.
“BHP’s course performance has been extremely strong and it outperforms its fellow source heavyweight, Rio Tinto‘ he said, referring to another great Australian miner.
“In fact, for the past 12 months, BHP has S&P/ASX 200 Index by about 14% — and it’s trading not far from its all-time high of $51.82 reached in May, with a price increase of about 36%,” he told CNBC via email.