BHP Billiton plc (ADR) (NYSE:BBL) announced that the company is entering a venture that will allow it to produce nickel sulphate next year.
The company said that it sees the battery minerals industry as being in short supply right now, which is prompting it to explore the production of nickel sulphate from its nickel refinery in Western Australia. It will also be considering the production of cobalt, according to a company executive.
BHP Billiton believes this will be a profitable business venture due to the fact that cobalt and nickel are both key ingredients for the production of lithium ion batteries, which means that a demand for this product will increase as more global automakers start producing electric vehicles.
While most of the world’s cobalt supply comes from the Democratic Republic of Congo (DRC), Australia is second in terms of largest mineral reserves and it is also a more ethical place to mine due to human rights concerns in the DRC.
“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 Billiton’s Nickel West refinery, said on Wednesday at a battery materials conference in Shanghai.
“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.”
BBL stock gained about 3.6% on Wednesday.