BHP moving to turn a nickel
BHP is scouting for more copper and nickel as it grows increasingly bullish about the rise of electric vehicles.
But the mining titan is souring on thermal coal, which is used to generate electricity, saying it could be phased out “sooner than expected”.
BHP chief financial officer Peter Beaven yesterday told investors and analysts at a briefing on the group’s longterm strategy that “the world will be a very different place in 10 to 20 years’ time”.
Mr Beaven said the miner believed that electrification of transport and the decarbonisation of power generation were two strategic themes going forward.
As such, BHP believes copper and nickel – used in electric vehicles and batteries – would provide long-term growth opportunities.
The update reveals a marked shift in BHP’s view of its Nickel West division in Western Australia. It has previously tried to sell the operation.
Chief executive Andrew Mackenzie announced last week the unit was no longer for sale.
Mr Beaven went further yesterday, saying the Melbourne-based miner was on the hunt for more nickel.
“We can, with a degree of conviction, say that adding options in copper and nickel sulfides … are likely to be a sound investment,” he said.
“Demand will grow and, at the same time, new supply sources will be hard to discover and permit and will be more expensive to develop.”
Mr Beaven said BHP would most likely add to its nickel holdings by engaging in exploration around its Western Australia operations.
But the miner would consider buying assets from rivals, he said.
Mr Beaven said BHP was not interested in developing lithium or cobalt — two other metals also used in batteries.
There was already an “abundant supply” of lithium while the substitution of cobalt by other materials reduced its attractiveness, he said.
Mr Beaven also suggested BHP’s thermal coal mines could now be for sale.
Rio Tinto sold its thermal coal mines in NSW and Queensland in 2017 and 2018.
BHP’s presentation said that while demand for thermal coal – used to generate electricity – would remain strong in the short term, its use would eventually be “phased out”.
That process would happen “potentially sooner than expected,” the presentation material said.