(Repeats merchandise issued late Friday)
By Melanie Burton
KWINANA, Australia, Aug 2 (Reuters) – BHP Group will face a take a look at of its potential to maneuver past bulk mining over the approaching yr with a foray into specialty chemical substances for the battery business at its as soon as struggling Nickel West division.
The worldwide miner stated on Friday it plans to begin manufacturing of nickel sulphate within the second quarter of subsequent yr, the next worth, increased purity product on the market to prospects all through the electrical automobile (EV) provide chain.
The transfer by the world’s greatest bulk miner – finest recognized 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 includes 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 supply materials for lithium-ion batteries.
Having tried for years to promote the enterprise, its turnaround beneath the stewardship of Eddie Haegel has made it one thing of a poster youngster for effectivity inside the firm, in line with one investor. It was elevated to “core” for development in Could.
However analysts and business consultants say it faces challenges, not least shifting BHP from a excessive quantity, low price producer of bulk commodities to a producer of high quality chemical substances demanded by battery makers, and worries about short-term demand.
ALL ABOARD THE NICKEL TRAIN
Nickel’s medium time period outlook is vivid, pushed by an anticipated increase in electrical automobile gross sales and a transfer in direction of nickel-rich batteries that may retailer extra power, giving an extended drive between costs.
Demand for nickel from the battery provide chain is predicted to double to 400,000 tonnes by 2025 from 200,000 tonnes this yr, in line with Wooden Mackenzie, which is round eight p.c of the present world nickel market.
Within the short-term, nevertheless, 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 p.c to the market simply as different sulphate producers additionally begin or increase output, together with Indonesia’s QMB New Vitality Supplies, Papua New Guinea’s Ramu and Finland’s Terrafirme.
First Quantum stated this week it might restart its Western Australian Ravensthorpe nickel operations by Q1 2020 to supply a blended hydroxide product (MHP) that’s cheaper to show into battery chemical substances.
BHP’s Haegel, says the miner will purpose 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 expect that integration is a aggressive benefit, we expect scale is a aggressive benefit,” Haegel advised a briefing on the plant on Friday.
As battery makers transfer in direction of increased nickel-content cathodes, they search for extraordinarily excessive purity metallic. One vendor of nickel sulphate, based mostly in Asia, stated that BHP’s present metallic merchandise weren’t first alternative for his prospects as a result of they took longer to course of.
“BHP Nickel briquette or powder just isn’t a primary buy choice for the nickel sulphate producer in Northeast Asia… It takes extra time to solvent (which results in) much less productiveness and better price,” he stated.
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 stated.
“All I can level to is that we now have had fairly exponential development in our gross sales and our prospects maintain shopping for our product.”
Nickel West at the moment contributes only a fraction to BHP’s income, accounting for simply $42 million of underlying earnings within the December half yr, in contrast with $three.5 billion from iron ore.
Analysts and buyers stated given its measurement and focus, the division might be a greater match for an additional proprietor if BHP chooses to revisit a sale.
“By world requirements, it’s a really materials asset within the nickel sulphide world,” stated Brenton Saunders of Sydney-based funding supervisor Pendal Group. “In the precise fingers, with the precise price construction it might be a fantastic asset.”
($1 = 6.8792 Chinese language yuan renminbi)
Reporting by Melanie Burton; modifying by Richard Pullin