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BHP Group reported Thursday that it has signed a nickel supply agreement with Tesla and will work with the electric carmaker to lower carbon emissions in the battery supply chain.
Tesla CEO Elon Musk has urged miners to produce more nickel, with demand set to skyrocket as the world moves more toward electric vehicles.
The company said in June that it expects to spend more than $1 billion a year on battery raw materials from Australia, given the reliability of the country’s mining industry and responsible manufacturing practices.
“Australia has the minerals to power the renewable energy era worldwide in the coming years,” Tesla President Robyn Denholm said in a recent speech at a Minerals Council of Australia event.
Western automakers are also looking to diversify supply chains to lessen their dependence on China, in line with a policy of U.S. President Joe Biden’s administration to rely on allies to supply most of the metals for electric vehicles.
Nickel makes batteries energy dense, allowing cars to go further on a single charge. Electric cars can hold up to 40 kg of nickel in their batteries.
Demand for nickel in batteries is estimated to grow by more than 500% over the next decade, largely to support the growing global demand for electric vehicles.
BHP reported that the metal will be supplied by its Nickel West project in Western Australia, which is set to begin producing nickel sulfate in the September quarter.
The company did not disclose details on the size of the deal with Tesla but estimates are that it could be for up to 18,000 tons of nickel per year.
The deal comes as the world’s largest miner is reviewing its oil business and considering options to reduce its emissions by more than 20 percent by 2030.
BHP and Tesla will also look at commodity tracking using blockchain, and work on energy storage solutions.
