KWINANA, Australia, Aug 2 (Reuters) – BHP Group will face a check of its skill to maneuver past bulk mining over the approaching 12 months with a foray into specialty chemical compounds for the battery business at its as soon as struggling Nickel West division.
The worldwide miner mentioned on Friday it plans to start out manufacturing of nickel sulphate within the second quarter of subsequent 12 months, the next worth, increased purity product on the market to clients all through the electrical automobile (EV) provide chain.
The transfer by the world’s greatest bulk miner – finest identified for iron ore and coal – underscores its efforts to place itself for a decarbonised world, which already depends on copper, one other of its core commodities.
Nickel West, which contains mines, a smelter and a refinery producing nickel as powder or briquettes, is constructing what BHP expects would be the world’s largest nickel sulphate facility to offer materials for lithium-ion batteries.
Having tried for years to promote the enterprise, its turnaround underneath the stewardship of Eddie Haegel has made it one thing of a poster youngster for effectivity inside the firm, in response to one investor. It was elevated to “core” for development in Could.
However analysts and business specialists say it faces challenges, not least transferring BHP from a excessive quantity, low price producer of bulk commodities to a producer of high quality chemical compounds demanded by battery makers, and worries about short-term demand.
ALL ABOARD THE NICKEL TRAIN
Nickel’s medium time period outlook is vibrant, pushed by an anticipated growth in electrical automobile gross sales and a transfer in direction of nickel-rich batteries that may retailer extra power, giving an extended drive between expenses.
Demand for nickel from the battery provide chain is anticipated to double to 400,000 tonnes by 2025 from 200,000 tonnes this 12 months, in response to Wooden Mackenzie, which is round eight % of the present world nickel market.
Within the short-term, nonetheless, an finish to a few of China’s EV subsidies in June has dampened demand all through the EV battery provide chain, notably for lithium.
BHP’s new manufacturing, which is equal to 22,000 tonnes of nickel or 100,000 tonnes of sulphate, will add round 11 % to the market simply as different sulphate producers additionally begin or elevate output, together with Indonesia’s QMB New Power Supplies, Papua New Guinea’s Ramu and Finland’s Terrafirme.
First Quantum mentioned this week it might restart its Western Australian Ravensthorpe nickel operations by Q1 2020 to supply a combined hydroxide product (MHP) that’s cheaper to show into battery chemical compounds.
BHP’s Haegel, says the miner will intention to match provide with demand and would versatile in what was “a really new, a really younger market”.
The miner was additionally assured it faucet into its experience in bulk merchandise.
“We predict that integration is a aggressive benefit, we expect scale is a aggressive benefit,” Haegel instructed a briefing on the plant on Friday.
As battery makers transfer in direction of increased nickel-content cathodes, they search for extraordinarily excessive purity steel. One vendor of nickel sulphate, primarily based in Asia, mentioned that BHP’s current steel merchandise weren’t first selection for his clients as a result of they took longer to course of.
“BHP Nickel briquette or powder just isn’t a primary buy possibility for the nickel sulphate producer in Northeast Asia… It takes extra time to solvent (which results in) much less productiveness and better price,” he mentioned.
Haegel acknowledged that BHP had acquired comparable suggestions which may be associated to the density of BHP’s briquettes.
“That hasn’t stopped folks shopping for briquettes – gross sales proceed to develop,” he mentioned.
“All I can level to is that we’ve got had fairly exponential development in our gross sales and our clients preserve shopping for our product.”
Nickel West presently contributes only a fraction to BHP’s earnings, accounting for simply $42 million of underlying earnings within the December half 12 months, in contrast with $three.5 billion from iron ore.
Analysts and buyers mentioned given its measurement and focus, the division might be a greater match for one more proprietor if BHP chooses to revisit a sale.
“By world requirements, it’s a really materials asset within the nickel sulphide world,” mentioned Brenton Saunders of Sydney-based funding supervisor Pendal Group. “In the correct palms, with the correct price construction it might be a fantastic asset.”
($1 = 6.8792 Chinese language yuan renminbi)
Reporting by Melanie Burton; enhancing by Richard Pullin