BHP says electric car era is dawning earlier than expected

Australia’s largest miner BHP has described 2020 as an “inflection point” for the rapidly approaching electric vehicle revolution as Elon Musk’s Tesla sold more than half a million battery-powered cars and sales in Europe more than doubled.

The ASX-listed mining giant, whose main commodities are iron ore, copper and coal, is seeking to expand its exposure to the minerals that will be increasingly required to power the clean energy age such as nickel and copper, which are two of the ingredients in lithium-ion batteries.

BHP Nickel West’s outgoing asset president Eddy Haegel says the electric vehicle era is dawning ahead of expectations.Credit:Trevor Collens

Last month, BHP announced a landmark agreement with Tesla to supply nickel from its Nickel West mining, smelting and refining operations in Western Australia.

BHP Nickel West’s outgoing president, Eddy Haegel, said the electric vehicle era was dawning ahead of expectations as world governments unleash “green” post-pandemic stimulus programs targeting transport electrification and set hard deadlines to phase out internal combustion-engine cars.

Automakers were also increasingly expanding their electric vehicle offerings, bringing a range of new battery cars to market in 2020, he said.

“In light of this ... by 2030, we expect that a quarter of all sales will be electric vehicles,” Mr Haegel told Australia’s annual mining industry conference, Diggers and Dealers, on Tuesday.

“Compared to two years ago, we have upgraded our expectations significantly.”

As big miners come under growing pressure from investors and wider society to better align their businesses with global efforts to combat climate change, BHP has been seeking to clean up its assets and its image including selling off its mines that produce thermal coal â€" the world’s most carbon-intensive energy source â€" and lifting its exposure to so-called “future-facing” commodities including copper and nickel.

Nickel accounts for a very small part of BHP’s portfolio, which is dominated by the steel-making ingredient iron ore, copper, coal and petroleum.

The company has been working to expand its Nickel West unit after reversing earlier plans to sell off the assets, which had been deemed “non-core” to its portfolio several years ago.

“By 2030, we expect that a quarter of all sales will be electric vehicles.”

BHP nickel boss Eddy Haegel

Mr Haegel said BHP’s nickel division now sold 85 per cent of its volumes to the electric vehicle market rather than the stainless steel industry. He said the miner expected this to be 90 per cent within a year. “Our transition from a stainless steel supplier, to a supplier of nickel metal to the battery industry, is all but complete,” he said.

Robyn Denholm, Tesla’s Australian-born chairwoman, in June declared Tesla was on track to spend more than $1 billion a year on Australian-mined lithium, nickel and other metals needed to make batteries and vehicles, but warned the country was missing out on a far more valuable role in the global supply chain.

While Australia is rich in reserves of battery raw materials, large amounts are typically shipped thousands of kilometres away to be processed and turned into higher-value products such as battery cells in China and other Asian countries due to an absence of a strong local refining sector.

Australia lags many countries in the transition to battery-powered cars (less than 1 per cent of Australia’s new car sales are EVs) but power companies and automakers say falling battery costs mean a tipping point is fast-approaching.

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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.

Peter de Kruijff is a journalist with WAtoday.

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