BHP shares jump 3% after news about a nickel deal with Tesla

3 days ago

A Tesla car charges astatine a Tesla Supercharger presumption connected April 26, 2021 successful Corte Madera, California.

Justin Sullivan | Getty Images

Shares of mining elephantine BHP Group jumped 3% successful Australia connected Thursday morning, aft the institution announced it volition beryllium supplying nickel to electrical carmaker Tesla.

In a connection connected Thursday, BHP said 1 of its mines based successful Western Australia, Nickel West, volition beryllium supplying the world's largest electrical conveyance shaper with nickel, a cardinal earthy worldly utilized successful EV batteries.

"Demand for nickel successful batteries is estimated to turn by implicit 500 per cent implicit the adjacent decade, successful ample portion to enactment the world's rising request for electrical vehicles," BHP Chief Commercial Officer Vandita Pant said successful a statement.

BHP presently derives astir of its net from robust ore, utilized predominantly to marque steel. 

Read much astir electrical vehicles from CNBC Pro

While determination were nary specifics connected the woody amount, Tesla had said successful June that it expects to walk much than $1 cardinal a twelvemonth connected earthy materials for batteries from Australia, citing the country's liable accumulation practices, according to Reuters.

BHP claims to be one of the astir sustainable and lowest c emanation nickel producers successful the

EV batteries volition surely beryllium captious and thrust involvement successful copper and nickel successful particular.

Vivek Dhar

commodity analyst, Commonwealth Bank of Australia

The mining elephantine presently supplies 85% of its nickel to planetary artillery worldly suppliers, according to its website. It has besides astir finished gathering a caller works which volition nutrient nickel sulphate, a worldly utilized successful the lithium-ion batteries that powerfulness electrical vehicles, the website said.

Outlook for nickel

Major miners are acceptable to spell bigger successful the mining resources needed to decarbonize the planetary economy, Vivek Dhar, a commodity expert from the Commonwealth Bank of Australia, told CNBC via email.

"EV batteries volition surely beryllium captious and thrust involvement successful copper and nickel successful particular," helium said.

However, Peter O'Connor, metals and mining expert astatine Shaw and Partners, was little bullish connected the wide nickel sector, successful presumption of abstraction for caller players to summation their marketplace share.

He said the nickel marketplace is inactive precise small, with semipermanent income turnover of astir $40 billion. Moreover, too BHP, determination are different cardinal ample players already crowding the market, specified arsenic Brazil's Vale and Russia's Norilsk Nickel, helium told CNBC connected Thursday.

BHP is listed successful Australia, New York and London.

Senior assets expert Gavin Wendt from MineLife told CNBC earlier this week helium has a 12-month terms people of 60 Australian dollars ($44) connected BHP, which is presently astatine 51.40 Australian dollars. His comments came earlier the nickel proviso woody with Tesla was announced.

"BHP's stock terms show has been highly beardown and it is outperforming its chap assets heavyweight, Rio Tinto," helium said, referring to different large Australian miner.

"In fact, BHP has implicit the past 12 months outpaced the S&P/ASX 200 Index by astir 14% – and it's trading not acold disconnected its all-time grounds precocious of $51.82 achieved successful May, with its terms up by astir 36%," helium told CNBC connected email.