SHANGHAI (Reuters) - BHP Billiton is expanding its business as a supplier of battery minerals at its nickel refinery in Western Australia, planning to start producing nickel sulphate next year and looking at cobalt output as well, a company executive said.

Cobalt and nickel are both critical ingredients for lithium ion batteries, and are expected to see a boom in demand as global automakers transition into producing electric vehicles.

Most of the world’s cobalt supply comes from the Democratic Republic of Congo (DRC), which has been beset by governance and human rights concerns. After the DRC, Australia has the world’s second-largest mineral reserves.

“Part of our transition to becoming a global supplier of battery materials means we have started looking at cobalt options as well,” Eduard Haegel, president of BHP Billiton’s Nickel West refinery, said on Wednesday at a battery materials conference in Shanghai.

“We see cobalt as remaining in short supply ... For this reason we are looking to broaden our support of the battery sector by increasing our contribution to cobalt supply.”

BHP is already due to start producing nickel sulphate at its Nickel West project next year, Haegel said, and is in the early stages of considering a plan to double that output.

The miner could grow its cobalt production and sell it as cobalt sulphate, a battery ready form of the metal, he said.

BHP could do this by developing a cobalt circuit at its Kwinana Nickel refinery and by increasing cobalt recovery at its Kalgoorlie smelter, both in Western Australia, as well as potentially taking third party cobalt concentrate, he said.

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