Mining giant BHP (ASX: BHP) has announced it has signed a nickel supply agreement with one of the world’s leading electric vehicle companies, Tesla Inc.
Under the deal, BHP will supply Tesla with nickel, which is a key electric battery material, from its Nickel West operations in Western Australia, the company stated on Thursday.
“Demand for nickel in batteries is estimated to grow by over 500% over the next decade, in large part to support the world’s rising demand for electric vehicles, ” BHP chief commercial officer, Vandita Pant said.
To meet the expected demand, BHP is already ramping up production at Nickel West.
In its June quarterly, BHP noted output had increased 11% to 89,000t for the period.
For the 2022 financial year, the company anticipates production will range between 85,000t and 95,000t.
Tesla spending big in Australia
The news comes after Tesla chair Robyn Denholm said last month the company was on track to spend more than $1 billion a year on battery metals from Australian mines.
In a speech to mining leaders in Canberra, Ms Denholm predicted that Tesla could soon consume “more than” $1 billion a year in Australian produced lithium, nickel, rare earths, and other battery metals.
With western automakers seeking to reduce their dependence on China for raw materials, Australia is in the box seat to fill the coming future demand.
A greener supply chain
In addition to the supply agreement, BHP and Tesla plan to work together on ways to make the battery supply chain more sustainable.
The companies will focus on end-to-end raw material traceability using blockchain technology and focus on partnering with firms that align with greener principles.
BHP will also collaborate with Tesla on energy storage solutions to identify opportunities of lowering carbon emissions in their respective operations through increased use of renewable energy paired with battery storage.
“BHP produces some of the lowest carbon intensity nickel in the world, and we are on the pathway to net zero at our operations. Sustainable, reliable production of quality nickel will be essential to meeting demand from sustainable energy producers like Tesla,” BHP minerals Australia president Edgar Basto said.
“The investments we have made in our assets and our pursuit of commodities like nickel will help support global decarbonisation and position us to generate long-term value for our business,” he added.