Tesla will secure nickel from commodity production giant BHP, the automaker’s latest move to secure direct sources of the raw material that is forecast to boost demand ahead of the decade.
BHP’s Nickel Waste Division will supply an undisclosed amount of the mineral from its mines in Western Australia. The two companies also agreed to work together to increase battery supply chain sustainability and to identify ways to reduce carbon emissions from their respective operations by using energy storage paired with renewable energy.
Nickel is a key mineral in lithium-ion batteries, and a cornerstone of Tesla’s next-gen battery chemistry. While many lithium-ion batteries have cathodes made of nickel, manganese and cobalt, Tesla is taking a different step. At Tesla’s Battery Day 2020, Musk said the automaker would invest in nickel-rich, cobalt-free cathodes for some models, citing greater energy density.
Tesla also hasn’t been shy about its intention to increase battery cell production in the coming decade, aiming to produce 100 gigawatt-hours of batteries by 2022, up from 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 maker in the French Pacific region of New Caledonia. Just a few months later, Tesla chairperson Robin Denholm confirmed that the company was looking to purchase about $1 billion a year in battery minerals from Australia alone.
Musk has repeatedly urged miners to produce more nickel. On an investment call last July, he told producers, “If you mine nickel efficiently and in an environmentally sensitive way, Tesla will give you a huge contract for the long term.” On Battery Day, he reiterated his position: “To scale, we really need to make sure we’re not constrained by total nickel availability,” he said. “I actually talked to the CEOs of the biggest mining company in the world and said, ‘Please make more nickel, this is very important.
But finding an environmentally friendly nickel source is a challenge. Some of them are related to issues related to today’s recovery and smelting technology; Others are more directly manageable by mining companies. For example, nickel mining operations in Indonesia, the world’s largest producer of the metal, have come under fire for their reliance on coal and their waste disposal techniques.
BHP claims its operations are among the most sustainable in the world, and Tesla’s decision to partner with it can be seen as a confirmation of that fact. The commodity maker said in February that up to 50% of its electricity would come from solar energy resources to power one of its nickel refineries.
The majority of the world’s nickel supply is currently consumed by the steel industry. While the demand for nickel in the EV and energy storage sectors is currently relatively low, the International Energy Agency estimates it will increase by more than 4,000% over the next 20 years – from 81 metric tons in 2020 to 3,352 metric tons by 2040.
Nickel waste has historically been a small part of BHP’s total business, dwarfed by its iron ore, copper and petroleum businesses. The commodity maker has tried to sell nickel waste several times since 2015, but it seems to have changed its tune based on demand forecasts from the EV and energy storage sectors.
Industry analyst Benchmark Minerals estimates the deal with Tesla could fetch up to 18,000 tonnes of nickel annually.