Demand spurs BHP nickel expansion in Western Australia

BHP has ticked off on a major expansion of the processing plant at a key nickel mine in Western Australia as it invests further in battery metals.

BHP’s nickel mine at Kambalda in Western Australia.

BHP has ticked off on a major expansion of the processing plant at a key nickel mine in Western Australia as it invests further in battery metals.

Outgoing Nickel West boss Eddy Haegel will tell the annual Diggers and Dealers conference in Kalgoorlie on Tuesday that BHP will lift the capacity of its Mount Keith processing plant by up to 50 per cent to take advantage of growing demand for nickel over the next decade.

BHP just threw $350m on the table for Canadian nickel explorer Noront Resources, competing with Andrew Forrest’s Wyloo Metals for control of the company, in a sign of its growing confidence in the outlook for nickel and electric vehicles.

The mining giant just signed a deal with Elon Musk’s Tesla for supply of nickel from its WA operations, with Mr Haegel to tell the Diggers audience BHP has recently upped its expectations for nickel demand over the next decade, amid rapid growth in the adoption of electric vehicles following the pandemic.

“We believe that over 2020 to 2030, overall nickel demand will grow at 5 per cent compound annual growth rate, and that nickel-in-battery demand will grow at a rate of 21 per cent CAGR,” he said.

That means global nickel supply will need to grow by another 1.3 million tonnes over the next decade, from just under 2.4 million tonnes in 2020.

That confidence means BHP will continue to invest in Nickel West, Mr Haegel will say, as it looks to turn the once-unloved division into the centrepiece of its move into the battery minerals supply chain.

While Nickel West’s nickel sulphate plant at Kwinana is still not producing at commercial quantities, with first output expected this quarter, Mr Haegel will tell the Diggers delegates the company is also considering a complete rebuild of its Kalgoorlie smelter rather than simply relining the furnace when it is next due for a major overhaul in 2025.

BHP is already running pilot trials of alternative technologies for a replacement of the nearly 50-year-old smelter, aimed at finding a model that can reduce its carbon footprint, and better cope with ore from other parts of the WA nickel sector rather than being constrained by a design intended for use with the ore found in the nearby Kambalda district.

“While the rebuild is a few years away still, we are investing in the smelter, with the first of up to three modular oxygen plants currently under construction for start-up in FY22,” Mr Haegel will say.

BHP’s investment in new mines and plant at its Mount Keith concentrator will lift output by about 8 per cent a year, on a compound basis, until the smelter is rebuilt in 2025, Mr Haegel will say, from levels of about 89,000 tonnes last ­financial year.

None of the investment programs since Mr Haegel took charge of Nickel West – which include BHP’s $US30m acquisition of Norilsk Nickel’s Honeymoon Well project, the nickel sulphate plant and the construction of a new underground mine – can match the billions in capital spending to keep BHP’s Pilbara iron ore operations running at peak performance.

But together they represent a sizeable and growing capital commitment to a division that BHP was trying to sell as surplus to requirements before Mr Haegel took charge of the operation.