About 50kg of nickel goes into each Tesla battery but the world isn't producing enough to keep up with demand

The Business

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By business reporter Rachel Pupazzoni

Posted 1h ago1 hours ago

Australian nickel is in high demand. (Rachel Pupazzoni, ABC News.)

Mining companies in Australia are racing to find the next big reserve of one of the world's most in-demand metals.

Key points:

• Australia was once a world-leading producer of nickel but fell behind

• Now miners are racing to find the next big reserve of the metal, which is a key component of batteries

• Big companies are ramping up production and are on the hunt for more mines

Nickel is a critical metal in batteries, and as the world keeps moving toward renewables, more batteries are needed to store energy.

In fact, there's a strong case that much more of it is needed than lithium — a commodity many people know of, because it is in the name of lithium batteries.

But there are a variety of batteries made with different metal compositions and, as Elon Musk puts it, batteries need a sprinkle of lithium compared to nickel.

"The lithium is actually two per cent of the cell mass," he said at a presentation in 2016.

"It is like the salt on your salad."

"It's a very small amount of the cell mass and a fairly small amount of the cost, but it sounds like it's big because it's called lithium-ion, but our batteries should be called nickel-graphite, because it's mostly nickel-graphite."

About 50 kilograms of nickel goes into each Tesla battery.

A report by the CSIRO shows about five times as much nickel (48,006 kilotons) will be needed to meet global demand by 2050 as lithium (8,990 kilotons).

The problem the world now faces is finding enough nickel to make all the batteries needed.

The search is on to find more nickel to meet the growing demand for the critical battery metal.(Supplied: Panoramic Resources)

Nickel lost its shine

Australia was once a world-leading producer of the shiny metal.

Such was its demand, nickel fetched as much as $US52,000 ($73,700) per tonne in 2007.

But just as prices were rising, the global financial crisis hit, sending the commodity spiralling down, to as low as about $US9,000 ($12,700) in October 2008.

Dozens of mines closed, including a brand new nickel mine opened by BHP in Ravensthorpe, in the south of Western Australia. It went under in January 2009, having operated for less than a year.

For years, BHP tried to sell its Nickel West business, but by the mid-2010s it decided to hold onto it and invest in the commodity.

Now, BHP is ramping up its nickel production and is on the hunt for more mines.

The search for nickel

Last week, BHP announced an unsolicited offer to buy nickel and copper miner Oz Minerals for $8.3 billion.

Oz Minerals advised shareholders to reject the bid, saying it was "highly opportunistic" and significantly undervalued the company.

BHP has deals to sell its nickel to three major car makers.

"I think there's a fantastic opportunity with the Tesla, the Ford and the Toyota agreements," BHP Nickel West asset president Jessica Farrell told The Business.

"I think it is a sign of a direct relationship with the miner and the car manufacturers and we're very well placed to provide sustainable nickel to the battery sector."

BHP Nickel West's Jessica Farrell wants to increase its nickel reserves so it can fulfil orders from car manufacturers.(ABC News: John Gunn)

While Ms Farrell said BHP had enough nickel to fulfil those deals, it clearly wants more.

"We have the second-largest nickel sulphide deposit globally in the Agnew-Wiluna belt, which is an incredible deposit," she said.

The Agnew-Wiluna belt is a geological strip of land rich in nickel and other commodities that stretches south, roughly through the middle of Western Australia, where other miners also operate.

"We're certainly not short of customers … in terms of what we see in the demand trajectory," she said.

"We're actively exploring globally, and we've significantly increased our own exploration spend within the portfolio of the land tenure that we have."

BHP is set to spend billions of dollars because it sees demand only rising.

"If we look out to 2030, we see a 60-per-cent increase in electric vehicles and then out to 2040 we see that going up another 30 per cent, to 90 per cent," she said.

"So, we see an incredibly good trajectory for demand — and that's globally.

"We'll also see that transition locally, I think, a lot faster than we expect."