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General Market Commentary
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General Market Commentary
Electric ambition: BHP eyes EV market with speciality chemicals
KWINANA, Australia, Aug 2 (Reuters) - BHP Group will face a test of its ability to move beyond bulk mining over the coming year with a foray into specialty chemicals for the battery industry at its once struggling Nickel West division.
The global miner said on Friday it plans to start production of nickel sulphate in the second quarter of next year, a higher value, higher purity product for sale to customers throughout the electric vehicle (EV) supply chain.
The move by the world’s biggest bulk miner - best known for iron ore and coal - underscores its efforts to position itself for a decarbonised world, which already relies on copper, another of its core commodities.
Nickel West, which comprises mines, a smelter and a refinery producing nickel as powder or briquettes, is building what BHP expects will be the world’s largest nickel sulphate facility to provide material for lithium-ion batteries.
Having tried for years to sell the business, its turnaround under the stewardship of Eddie Haegel has made it something of a poster child for efficiency within the company, according to one investor. It was elevated to “core” for growth in May.
But analysts and industry experts say it faces challenges, not least moving BHP from a high volume, low cost producer of bulk commodities to a producer of top quality chemicals demanded by battery makers, and worries about short-term demand.
ALL ABOARD THE NICKEL TRAIN
Nickel’s medium term outlook is bright, driven by an expected boom in electric vehicle sales and a move towards nickel-rich batteries that can store more energy, giving a longer drive between charges.
Demand for nickel from the battery supply chain is expected to double to 400,000 tonnes by 2025 from 200,000 tonnes this year, according to Wood Mackenzie, which is around 8 percent of the current global nickel market.
In the short-term, however, an end to some of China’s EV subsidies in June has dampened demand throughout the EV battery supply chain, particularly for lithium.
BHP’s new production, which is equivalent to 22,000 tonnes of nickel or 100,000 tonnes of sulphate, will add around 11 percent to the market just as other sulphate producers also start or raise output, including Indonesia’s QMB New Energy Materials, Papua New Guinea’s Ramu and Finland’s Terrafirme.
First Quantum said this week it would restart its Western Australian Ravensthorpe nickel operations by Q1 2020 to produce a mixed hydroxide product (MHP) that is cheaper to turn into battery chemicals.
BHP’s Haegel, says the miner will aim to match supply with demand and would flexible in what was “a very new, a very young market”.
The miner was also confident it tap into its expertise in bulk products.