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Shares of Australian miner BHP jump 3% after news of nickel supply deal with Tesla

A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California.

Justin Sullivan | Getty Images

Shares of mining giant BHP Group jumped 3% in Australia on Thursday morning, after the company announced it will be supplying nickel to electric carmaker Tesla.

In a statement on Thursday, BHP said one of its mines based in Western Australia, Nickel West, will be supplying the world’s largest electric vehicle maker with nickel, a key raw material used in EV batteries.

“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,” BHP Chief Commercial Officer Vandita Pant said in a statement.

BHP currently derives most of its earnings from iron ore, used predominantly to make steel. 

Read more about electric vehicles from CNBC Pro

While there were no specifics on the deal amount, Tesla had said in June that it expects to spend more than $1 billion a year on raw materials for batteries from Australia, citing the country’s responsible production practices, according to Reuters.

BHP claims to be one of the most sustainable and lowest carbon emission nickel producers in the
world.

EV batteries will certainly be critical and drive interest in copper and nickel in particular.

Vivek Dhar

commodity analyst, Commonwealth Bank of Australia

The mining giant currently supplies 85% of its nickel to global battery material suppliers, according to its website. It has also almost finished building a new plant which will produce nickel sulphate, a material used in the lithium-ion batteries that power electric vehicles, the website said.

Outlook for nickel

Major miners are set to go bigger in the mining resources needed to decarbonize the global economy, Vivek Dhar, a commodity analyst from the Commonwealth Bank of Australia, told CNBC via email.

“EV batteries will certainly be critical and drive interest in copper and nickel in particular,” he said.

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