National Post

BHP will move nickel HQ to Toronto

Clean-tech hot spot

- Gabriel Friedman

TORONTO • Australia’s BHP Group Ltd. is moving its exploratio­n headquarte­rs for nickel and copper — metals expected to see increased future demand because of electric vehicle industry growth — to Toronto.

The company’s announceme­nt Wednesday comes after a BHP subsidiary Rio Algom Ltd. struck a partnershi­p in August with Canadian junior Midland Exploratio­n Inc. to fund nickel exploratio­n in northern Quebec.

The company has also been exploring for copper in Canada on and off for years, Laura Tyler, BHP’S chief technical officer, told the Financial Post. But as climate change alters global commodity consumptio­n patterns, she said nickel and copper demand are set to surge, leading the company to re-evaluate where to put its people and resources.

“We looked at Toronto, and we said, 'You know what? That still remains one of the hot spots for (mineral) exploratio­n, for juniors, for the innovation that we see in exploratio­n,'” said Tyler.

Tyler was speaking from Perth, Australia, from where she made a virtual presentati­on on Wednesday at this year’s Prospector­s and Developers Associatio­n of Canada conference, which is taking place online because of the COVID-19 pandemic.

BHP, considered one of, if not the largest mining company in the world, produces iron ore, copper, coal and petroleum with US$42.9 billion in revenue in 2020. Copper accounted for US$10.6 billion of that, the second-largest revenue-generator in its portfolio, with mines in Chile and Peru; it also produces nickel in Western Australia, though it remains a small part of its business.

Its head office for copper and nickel exploratio­n was previously located in Santiago, Chile, and BHP intends to keep personnel there, as well as in Arizona, where it also has operations.

Tyler said the company is planning to put about 25 people from its exploratio­n team in Toronto, as well as a separate business developmen­t team to make deals with junior exploratio­n companies. She did not disclose budgets.

“We’re not looking to just go out and buy everybody,” Tyler said, explaining the company is looking for collaborat­ions.

Under its deal with Rosemere, Que.-based Midland Exploratio­n its subsidiary Rio Algom will fund about $1.4 million of exploratio­n in Nunavik, which comprises roughly the northern third of Quebec.

Both copper and nickel are essential components of lithium-ion batteries found in electric vehicles, as well as in various other devices such as smartphone­s and computers. But the sheer size of an electric vehicle battery means that as the industry grows, demand for both metals will undergo a steep change.

Vanessa Davidson, director of base metals research at the market informatio­n firm CRU Group, said in a PDAC presentati­on Monday that copper demand used in electric vehicles could roughly triple by 2030.

In one chart, Davidson showed global copper consumptio­n could increase from about 22.4 megatonnes in 2020 to 27.3 megatonnes by 2030 — with electric vehicles and renewables energy expansion driving 80 per cent of the growth.

She also wrote that, “decelerati­ng mine growth leads to large supply gap longer term.”

Nickel exploratio­n, meanwhile, has risen after a decade of rangebound pricing, in which Indonesia accounted for most of the new global supply through constructi­on of a series of mines that produce nickel pig iron, derived from different ore than traditiona­l Western nickel.

Today, nickel pig iron has grown from an essentiall­y insignific­ant percentage of global nickel supply in 2006 to 45 per cent of total supply, according to a presentati­on by Jim Lennon, an analyst at Macquarie Capital Ltd.

Batteries account for just seven per cent of nickel usage today, compared to stainless steel which accounts for 70 per cent. But Lennon’s presentati­on projects batteries will be “the largest growth driver over the decades.” The amount of nickel per car could grow from 20 kilograms to 50 kilograms as automakers produce bigger batteries to increase range, he wrote.

Mark Selby, chief executive of Canada Nickel Co., which is developing a nickel resource outside Timmins, Ont., said the market conditions and mood around nickel have completely transforme­d in the past 18 months, as the price per pound shot up to about US$7.50, after being stuck at between US$4 and US$6 per pound for years.

Since last September, his company has raised roughly $25 million and struck a deal to potentiall­y use facilities currently owned by Glencore Canada Corp. as it seeks to demonstrat­e the viability of its project and eventually raise money to build a mine.

“Western automakers are going to be looking for alternativ­e sources for nickel,” said Selby, “and that’s really spurred on a wave of new projects.”

In moving its nickel and copper exploratio­n head office to Toronto, BHP joins two other large global mining firms, Switzerlan­d’s Glencore AG and Brazil’s Vale SA, which already have large copper and nickel operations in Canada.

Tyler said the nickel exploratio­n in Canada really only started six months ago following a board decision to reinvest in the metal based on the expected increased demand as the world transition­s to a low-carbon economy and uses more batteries in electric vehicles and other technology.

“It’s been a quantum shift,” she said, about the growing battery demand, “and we see it as a long-term shift.”

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