The new agreement will see BHP supply Tesla with nickel from its Nickel West plant in Western Australia, with the key metal to be used by the carmaker to manufacture electric vehicle (EV) batteries.
The two companies will also work together on finding new ways to make the battery supply chain more sustainable, and also to identify opportunities to lower carbon emissions through the increased use of renewable energy.
“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.
“We are delighted to sign this agreement with Tesla, and to collaborate with them on ways to make the battery supply chain more sustainable through our shared focus on technology and innovation.”
BHP said the terms of the agreement, including how much nickel it would supply Tesla were confidential.
Tesla already sources more than one third of its nickel from Australia and chairwoman Robyn Denholm only last month said she expects the company to ramp up its intake of battery raw materials from Australia.
“Australia has the minerals to power the renewable energy age throughout the world in the coming years.” Denholm said during a Minerals Council of Australia event.
“We expect our spend on Australian minerals to increase to more than $1 billion per annum for the next few years,” she said.
In addition to the supply agreement, BHP and Tesla will collaborate on ways to make the battery supply chain more sustainable, with a focus on end-to-end raw material traceability using blockchain; technical exchange for battery raw materials production; and promotion of the importance of sustainability in the resources sector.
BHP Minerals Australia president Edgar Basto said the company will also work with Tesla on energy storage solutions to identify opportunities to lower 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,” Basto said.
“Sustainable, reliable production of quality nickel will be essential to meeting demand from sustainable energy producers like Tesla.
“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.”
The announcement of the deal comes as reports indicate BHP is reviewing its petroleum business and considering options including a trade sale as it looks to move away from both thermal coal and petroleum.
The deliberations are said to be still at an early stage and no final decision has been made.
BHP has been in oil and gas since the 1960s and has assets in the Gulf of Mexico and off the coast of Australia. It produced 102.8 million barrels of oil equivalent in the year ending June 30.
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