Australian miner BHP shares jump on news of nickel supply deal with Tesla EVs

A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California.

Justin Sullivan | Getty Images

Shares of mining giant BHP Group rose 3% in Australia on Thursday morning after the company announced it will supply nickel to electric car makers Tesla.

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.

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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
world.

EV batteries will certainly be crucial, driving interest in copper and nickel in particular.

Vivek Dhar

commodity analyst, Commonwealth Bank of Australia

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.

Outlook for nickel

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.

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