Tesla inks deal with BHP for “sustainable” Australian nickel for EV batteries

Tesla has inked a deal with Australian mining giant BHP that will see it source Australian nickel from its Nickel West operations to meet rising battery material demands.

In an announcement on Thursday, BHP said its Nickel West operations is among the “most sustainable and lowest carbon emission” producers of nickel around the world.

As reported by The Driven’s sister site RenewEconomy in late 2020, BHP’s Nickel West plant entered a new 15-year renewable power purchase agreement with Southern Cross Energy, and has plans to build an 18.5mW solar and battery system at Nickel West’s Leinster and Mount Keith operations.

BHP’s new deal with Tesla will see the two collaborate on increasing BHP’s use of solar energy and battery storage, as well as see them working towards better transparency in the supply chain in order to further improve its sustainability practices, the mining giant said.

It will do this by developing methods of tracing raw materials from mine to factory floor using blockchain, it says. Tesla was contacted for comment but did not respond.

Nickel is of high importance to Tesla because it wants to make high nickel batteries in a 4680 format that are more energy-dense for applications such as the Tesla Semi electric truck.

At the EV maker’s Battery Day in 2020, Musk pleaded with miners to produce more nickel, and BHP was not slow in recognising the role its Nickel West operations could play in meeting this request.

With the new deal now inked, BHP chief commercial officer Vandita Pant said in a statement: “Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world’s rising demand for electric vehicles.”

“We are delighted to sign this agreement with Tesla, and to collaborate with them on ways to make the battery supply chain more sustainable through our shared focus on technology and innovation.”

Demand for EV battery materials such as nickel will only increase as the transport sector continues to decarbonise.

SPGlobal says it believes that the EV battery market will become the second-largest user of nickel, and demand set to increase fivefold by 2030, according to Alina Racu, nickel market analyst at Nornickel.

While recycling nickel from spent EV batteries may decrease the need for newly mined nickel, Racu thinks that it will take 10 to 20 years before there is a significant amount of recycled nickel on the market.

In the meantime, sourcing sustainably produced nickel along with other battery materials is paramount if the transition to clean transport is to be meaningful.

To this end, BHP says it is rising to the challenge. “BHP produces some of the lowest carbon intensity nickel in the world, and we are on the pathway to net zero at our operations,” BHP Minerals Australia President, Edgar Basto said in a statement.

“Sustainable, reliable production of quality nickel will be essential to meeting demand from sustainable energy producers like Tesla Inc.”