World's Top Miner Embracing the Boom in Electric Car Batteries

Written by
David Stringer
Written by

David Stringer

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(Bloomberg) -- BHP Billiton Ltd. is boosting sales of the top-quality nickel that's needed for electric vehicle batteries, another sign the world's biggest miner is targeting more opportunities in the booming sector.

Sales of refined nickel, a category that includes the premium products used for battery production, jumped 18 percent in the three months to Sept. 30 from a year earlier, according to a statement Wednesday. The company has begun offering more detailed data on nickel and cobalt production amid investor interest in its exposure to the rise of EVs.

BHP's Nickel West operation in Western Australia is aiming to sell 90 percent of output to the battery sector by the end of next year, switching away from a traditional customer base in the stainless steel market. Laboratory tests are also developing methods to produce cobalt sulphate, another key material for rechargeable batteries.

The nickel sector is becoming a two-tiered market, with a weaker outlook for materials bound for the stainless steel industry and robust demand growth in the EV sector that'll support prices, Goldman Sachs Group Inc. said in a note received Tuesday. In a note of caution, Russia's nickel mining giant MMC Norilsk Nickel PJSC sees EV-related demand slowing in 2019 as some countries cut subsidies to the vehicles.

“The market hasn't made its mind up about how big a deal batteries will be for nickel, but there are a lot of bullish forecasts out there, so it is an area of interest for sure,” Mathew Hodge, an analyst at Morningstar Inc. in Sydney, said by phone.

BHP already supplies battery manufacturers including Panasonic Corp., the partner of Tesla Inc., and is studying an expansion plan that would make Nickel West the world's biggest supplier of nickel sulphate, Asset President Eddy Haegel said in August. Longer-term options could see the unit combine cobalt and nickel materials to develop an intermediate product for the battery supply chain that would command a higher premium.

Existing cobalt production at the unit slipped 11 percent in the September quarter, BHP said. Operations at the division's Kalgoorlie smelter are expected to return to full capacity by next month after a September fire that caused disruptions, it said.

Even though underlying profit at Nickel West surged in fiscal 2018 on higher prices, the unit's future is uncertain as it contributes less than 2 percent of BHP's total earnings. The producer is “happy to retain Nickel West for now, but it could go either way in the future” and the shift to service the battery sector is boosting the asset's marketability, Chief Executive Officer Andrew Mackenzie said on an August earnings call.

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To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Keith Gosman, Jake Lloyd-Smith