Nickel ore. Picture: SUPPLIED
Nickel ore. Picture: SUPPLIED

BHP Billiton is boosting sales of the top-quality nickel used in electric-vehicle (EV) batteries as the world’s biggest miner targets more opportunities in the booming sector.

Sales of refined nickel, a category that includes premium products used for battery production, were 18% higher in the September quarter than in the previous matching quarter, according to a statement on Wednesday. The company has begun offering more detailed data on nickel and cobalt production amid investor interest in its exposure to the rise of EVs.

BHP’s Nickel West operation in Western Australia aims to sell 90% of output to the battery sector by the end of 2019, switching away from a traditional customer base in the stainless-steel market. Laboratory tests are  being used to develop methods to produce cobalt sulphate, another key material for rechargeable batteries.

The nickel sector was becoming a two-tiered market, with a weaker outlook for materials bound for the stainless steel industry and robust demand growth in the EV sector that would support prices, Goldman Sachs Group said.In a note of caution, Russian nickel mining giant MMC Norilsk Nickel envisaged EV-related demand slowing in 2019 as some countries cut subsidies to the vehicles.

“The market hasn’t made its mind up about how big a deal batteries will be for nickel, but there are a lot of bullish forecasts out there, so it is an area of interest for sure,” said Mathew Hodge, an analyst at Morningstar in Sydney. .

BHP supplies battery manufacturers including Panasonic, partner of Tesla, and is studying an expansion plan that would make Nickel West the world’s biggest supplier of nickel sulphate, asset president Eddy Haegel said in August. Longer-term options could involve the unit combining cobalt and nickel materials to develop an intermediate product for the battery supply chain that would command a higher premium.

Cobalt production at the unit slipped 11% in the September quarter, BHP said. Operations at the division’s Kalgoorlie smelter were expected to return to full capacity by  November after a fire in September caused disruption, it said.

Even though underlying profit at Nickel West surged in financial 2018 on higher prices, the unit’s future was uncertain as it contributed less than 2% of BHP’s total earnings. The producer was “happy to retain Nickel West for now, but it could go either way in the future” and the shift to service the battery sector was boosting the asset’s marketability, CE Andrew Mackenzie said on an August earnings call. Bloomberg