BHP inks nickel supply deal with Toyota-Panasonic battery venture

BHP (NYSE: BHP; LSE: BHP; ASX: BHP) has inked a deal to supply nickel sulphate from Western Australia to a battery-making joint venture between Toyota Motor and Panasonic called Prime Planet Energy & Solutions (PPES). The deal will expand BHP’s  footprint in the electric vehicle (EV) sector. 

The nickel sulphate will come from the miner’s newly opened Kwinana plant, which is expected to produce 100,000 tonnes per year when fully operational. That is enough premium product to make 700,000 EV batteries each year, Nickel West asset president Jessica Farrell said. 

BHP’s supply will allow PPES to develop lower carbon batteries that will be supplied to EV manufacturers including Toyota. The parties also intend to identify ways to implement standards for end-to-end raw materials traceability, ethical sourcing and human rights reporting 

Toyota Motor Corporation Australia (TMCA) and Nickel West will also collaborate on EV supply on the back of a successful trial in December 2020.   

Nickel is a key component for electric vehicle (EV) cathodes, and the world’s no. 1 mining company expects demand for the metal from the batteries sector alone to increase by 500% over the next decade.   

Nickel sulphate, a key battery chemical, has much higher margins than nickel metal and BHP believes it will be in high demand due to a spike in the adoption EVs, as governments commit to decarbonizing and set end dates for combustion engine sales. 

The MoU with Prime Planet and Toyota Tsusho, the automaker’s metals trading arm, shares similarities with the supply agreement BHP inked with Tesla in July. In both cases, BHP has committed to work with the companies on lowering carbon emissions in the battery supply chain. 

Farrell noted BHP is carefully considering the carbon intensity of its nickel products. 

“We have invested in our Nickel West facilities and power agreements so that we can now deliver some of the world’s most sustainable and lowest carbon emissions nickel to customers,” she said. 

Farrell highlighted that 50% of the electricity for the Nickel West refinery would come from the Merredin solar farm, with another solar power facility being built in the Goldfields to power mines and processing facilities there.