Ann: Disclosure Document, page-29

EVs are here to stay, and the world’s biggest miner says it’s going to spur a run for nickel demand well beyond anything seen before.

Following on from IEA figures last week, which show we could need a ludicrous 60 new nickel mines by 2030 to achieve announced carbon reduction pledges, BHP’s Nickel West boss Jessica Farrell told delegates at the Diggers and Dealers Mining Forum in Kalgoorlie demand for nickel to 2050 would increase 200-300% on the previous three decades.

Mind-boggling. No wonder BHP has decided to reinvigorate the division which almost closed down a few years ago when stainless steel demand fell off a cliff and tanked prices.

At ~US$22,500/t, nickel is currently fetching a pretty penny, with BHP selling upwards of 85% of its product into the battery market, including MoUs with current and future EV makers Tesla, Toyota and Ford.

In just eight years, 3 in 5 car sales will be electric.

“Electrification of autos is gathering pace and we expect that by 2030, around 60% of all car sales will be electric,” Farrell said.

“Further… we expect that by 2040, 90% of car sales will be electric. The dominant battery chemistry powering this global fleet is expected to rely on nickel.

“Locally, Canberra is the first jurisdiction in Australia to mandate that all new cars must be electric, by 2035.

“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 per cent of demand, in the previous 30 years.”

At BHP’s (ASX:BHP) own internal 1.5C global warming scenario, that could rise to fourfold.

BHP ramps up investment to capture battery theme

BHP, which produces around 85,000t of nickel metal a year in WA, is cautious to provide an estimate on where it thinks nickel prices will go as demand for the commodity ramps up.

But with class 1 nickel sulphides in short supply, its confidence can be shown in the level of investment BHP is putting into its Nickel West division, along with its up to US$100 million investment earlier this year in the Kabanga nickel project in Tanzania.

BHP holds 7.4Mt of nickel resources in the Agnew-Wiluna Belt in WA, where it has started up two new mines in recent years and has another, the Leinster B-11 block cave, due to complete its development in 2023.

Farrell said the previously unloved and underfunded division is now spending millions on exploration, more than at any point since BHP acquired the division in its $9.2 billion takeover of Western Mining Corporation in 2005.

“To scale Nickel West – we need to not only develop new mines, but also explore the different pathways we have available to unlock more nickel,” she said.

“Our planned furnace rebuild at the Kalgoorlie Nickel Smelter is fundamental to our future – it provides an opportunity to sustain our integrated supply chain, further unlock our resource, with the potential to increase capacity and recovery, and could create a pathway for
additional feed sources.

“These investments take a lot of planning and preparation and we’re well advanced in the project, which continues in line with our Capital Allocation Framework.

“In the meantime, there are extensive debottlenecking opportunities to increase capacity and recovery at each of our operations, such as potentially introducing expanded milling capacity.”

After delivering first production last year after a delayed construction and ramp up, BHP’s nickel sulphate plant is expected to hit its 100,000t rate (22,000t of nickel metal) by the end of the year, although it has gone mum on a previously discussed plan to double its capacity.