BHP , a Melbourne-based mining, metal, and petroleum conglomerate, signed a nickel supply deal with Tesla on July 22, as reported by Caixin on July 23. Under the agreement, Tesla would procure nickel from BHP’s subsidiary Nickel West for its batteries and electric vehicles (EVs). While the two companies did not disclose further details about the deal, they have also agreed to explore future collaborations on battery supply chain, renewable energy, and carbon emissions reduction.

As an essential element to improving the energy density of EV batteries, nickel has emerged as a hotspot in the commodities market due to the global development of EVs. BHP’s chief commercial officer Vandita Pant estimated that following the rising demand for EVs, the demand for nickel would expand more than fivefold in the next decade. The growing demand for nickel has also brought up its price. On July 22, the trading prices of nickel were at RMB139,000 (about USD21,500) per ton on the Shanghai Futures Exchange and USD19,000 per ton on the London Metal Exchange, respectively up 12.49% and 14.45% from the beginning of this year. Currently, BHP sells 85% of nickel to battery raw material producers worldwide. Over the fiscal year ended June 2021, West Nickel produced 80,000 tons of nickel, accounting for nearly 90% of its parent’s total output.

Data from S&P Global Platts show that cathode metals including lithium, nickel, and cobalt are now responsible for 30% to 45% of the total production cost of batteries, which prompts battery and EV makers to enter long-term contracts with metal suppliers to secure battery raw materials. For example, BMW signed an EUR285m deal this March with US lithium supplier Livent amid the company’s goal to transition half of its car sales to EVs by 2030. In April, Tesla announced a partnership with Trafigura, a metal trading company that held a 19% stake in the Goro Nickel-Cobalt Mine in New Caledonia. In the same month, Chinese battery manufacturer CATL bought a stake in China Molybdenum Co’s Kisanfu Copper-Cobalt Mine for USD137.5m. As another more recent example, General Motors invested in Australian mining firm Controlled Thermal Resources earlier this month to accelerate the extraction of lithium, aiming to power the automaker’s EVs.

Sources:

https://cn.wsj.com/articles/%E7%89%B9%E6%96%AF%E6%8B%89%E4%B8%8E%E5%BF%85%E5%92%8C%E5%BF%85%E6%8B%93%E7%AD%BE%E7%BD%B2%E9%95%8D%E4%BE%9B%E5%BA%94%E5%8D%8F%E8%AE%AE-11626915037

https://www.wsj.com/articles/ev-batteries-the-next-victim-of-high-commodity-prices-11626950276?mod=searchresults_pos1&page=1

https://www.caixin.com/2021-07-23/101744254.html

https://www.bhp.com/media-and-insights/news-releases/2021/07/bhp-enters-into-nickel-supply-agreement-with-tesla-inc/

https://www.nasdaq.com/articles/catl-takes-stake-in-china-moly-cobalt-mine-for-%24137.5-mln-2021-04-11

https://www.theverge.com/2021/7/2/22559718/gm-lithium-ctr-ev-battery-investment-salton-sea

https://www.spglobal.com/platts/en/market-insights/latest-news/metals/033021-bmw-signs-eur285-million-lithium-supply-deal-with-livent