Tesla will secure nickel from raw materials giant BHP, the automaker’s latest move to secure direct sources of raw materials that are expected to increase demand before the end of the decade.
BHP’s Nickel West division will supply an undisclosed amount of ore from its mines in Western Australia. The two companies also agreed to work together to increase the sustainability of the battery supply chain and to identify ways to reduce carbon emissions from their respective operations by using energy storage associated with renewable energies.
Nickel is a key mineral in lithium-ion batteries and the cornerstone of Tesla’s next-generation battery chemistry. While many lithium-ion batteries have nickel, manganese, and cobalt cathodes, Tesla takes a different approach. During Tesla’s Battery Day 2020, Musk said the automaker would invest in a nickel-rich, cobalt-free cathode for certain models, citing greater energy density.
Tesla has also not shied away from its own intention to increase battery cell production over the next decade, aiming to produce 100 gigawatt hours of batteries by 2022, to 3 terawatt hours per year by 2030.
To this end, the company is moving quickly to secure purchase agreements with major nickel producers. Earlier this year, the automaker announced a partnership with a nickel producer in the French Pacific Territory of New Caledonia. Months later, Tesla President Robyn Denhlm confirmed that the company was looking to purchase around $ 1 billion a year in battery minerals from Australia alone.
Musk has repeatedly urged miners to produce more nickel. In an investment call last July, he told producers: “Tesla will give you a giant contract for a long time if you mine nickel in an efficient and environmentally friendly way. On Battery Day, he reiterated his position: “To move forward, we really need to make sure that we are not limited by the total availability of nickel,” he said. “I actually spoke with the CEOs of the world’s largest mining company and said, ‘Please make more nickel, this is very important.’ “
But finding an environmentally friendly source of nickel is a challenge. Part of this has to do with problems endemic to current recovery and fusion techniques; others are more directly manageable by mining companies. For example, nickel mining operations in Indonesia, the world’s largest producer of metal, have been criticized for their dependence on coal and their waste disposal techniques.
BHP says its operation is one of the most sustainable in the world, and Tesla’s decision to partner with it could be seen as confirmation of that fact. The commodity producer said in February that up to 50% of the electricity to power one of its nickel refineries would come from solar energy resources.
The vast majority of the world’s nickel supply is currently consumed by the steel industry. While the demand for nickel in the electric vehicle and energy storage sectors is currently relatively low, the International Energy Agency estimates that it will increase by more than 4,000% over the next 20 years, rising from 81 metric tonnes in 2020 to 3,352 metric tonnes by 2040.
Nickel West has historically been a tiny fraction of BHP’s overall business, overshadowed by its iron ore, copper and petroleum businesses. The commodities producer has attempted to sell Nickel West on several occasions since around 2015, but it appears to have changed its tone with the expected surge in demand from the electric vehicle and energy storage sectors.
Industry analysts Benchmark Minerals have estimated that the deal with Tesla could be worth up to 18,000 tonnes of nickel per year.