BHP Eyes Cobalt Production to Become Global Supplier of Battery Metals

- April 18th, 2018

The miner could grow its cobalt production and sell it as cobalt sulfate, an essential component in the lithium-ion batteries used to power electric cars.

Mining giant BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BHP) is looking to produce cobalt as part of its plan to become a global supplier of battery materials, a company executive said on Wednesday (April 18).

Demand for cobalt, a key element in the lithium-ion batteries used to power electric cars, is expected to surge in the coming years.

“Part of our transition to becoming a global supplier of battery materials means we have started looking at cobalt options as well,” Eduard Haegel, president of BHP’s Nickel West refinery, said at a battery materials conference in Shanghai.

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More than 50 percent of the world’s cobalt supply comes from the Democratic Republic of Congo, the world’s top cobalt-producing country, but BHP is looking to produce the metal in Western Australia, where the company operates a nickel refinery.

Australia is the world’s third-largest producer of the metal, which is mined as a by-product of copper and nickel mining. The country also holds the second-largest cobalt reserves around the world.

As demand for electric cars increases, the need for cobalt and other battery materials will also surge. In fact, supply of cobalt will need to reach 180,000 tonnes by 2026 from just 48,000 tonnes in 2016 to fulfill the increasing demand for electric cars, Benchmark Mineral Intelligence says.

“We see cobalt as remaining in short supply … For this reason we are looking to broaden our support of the battery sector by increasing our contribution to cobalt supply,” Haegel said.

BHP could grow its cobalt production and sell it as cobalt sulfate, a battery-ready form of the metal, he added.

Speaking about how BHP would be able to develop battery-grade cobalt, Haegel said the company could do this by developing a cobalt circuit at its Kwinana nickel refinery and by increasing cobalt recoveries at its Kalgoorlie smelter. BHP could also potentially take third-party cobalt concentrate.

The world’s top mining company is already planning to start producing nickel sulfate, another key element in electric car batteries, next year. In fact, BHP expects to have sold 90 percent of its nickel sulfate supply by the end of 2019.

On Wednesday, shares of BHP closed up 0.47 in Sydney at AU$30.07. The company’s share price has increased 1.31 percent since January.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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