bhp\'s ev plans for nickel west - more than putting lipstick on a pig

by:Beauty Spirit     2020-08-06
BHP Billiton, August 2017 (BHP)
Revealed plans to join the electric vehicle boom, investing $43 in a sulfuric acid plant at the Kwinana refinery in Western Australia, which is part of its nickel Western Division.
With an annual output of 100,000 tons, the plant is probably the largest nickel sulfate plant in the world.
It is expected to start production for the first time in April 2019, and BHP Billiton said that according to industry demand, the company is also considering expanding the second phase of nickel sulfate plant to 200,000 tons per year.
Kwinana will produce nickel sulfate using nickel and sulfuric acid from Kalgoorlie nickel smelters for batteries.
The smelter currently extracts concentrate from the West Nickel North gold mine business and converts it into nickel iced copper for further processing into nickel powder and coal balls in Kwinana.
BHP Billiton is expected to sell about 65%-
Its 70% of nickel yield in 2018 flow battery industry about 45,000-
50,000 tons of metal.
On April 2018, Reuters reported that BHP Billiton was also considering an option to increase its production of cobalt sulfate.
The company can achieve this by building a cobalt circuit in Kwinana, increasing the cobalt recovery rate of Kalgoorlie, and potentially obtaining a third-party cobalt concentrate.
Source: BHP Billiton Nickel West is a fully integrated mineto-
Market Nickel business including Mt Keith and Leinster mine, Kalgoorlie smelter, Kambalda concentrator and Kwinana refinery.
Kambalda will start maintenance and maintenance on July 2018 as Long nickel mine, its main ore supplier, will be closed on May 31.
Nickel West has about 2,500 employees and has been a supplier of nickel products in the stainless steel industry for half a century.
BHP Billiton gained control of West Nickel in 2005 by acquiring WMC Resources, and has tried to sell the company many times so far, but has not succeeded.
The most recent one was in 2014, when it was reported that BHP wanted the business to reach at least $.
Glencore, the Swiss trading giant (OTCPK:GLCNF)
It is rumored that the Chinese nickel giant, Jinchuan, has made a formal bid, and the Swiss company is said to have made an offer of about $ 200mn.
Some sources speculated that Glencore was interested in Nickel West in order to close the company to improve its position in the nickel trading market.
At the time, consensus analysts estimated West Nickel to be worth about US dollars, but UBS set the figure at negative US dollars due to the huge environmental debt of the business.
The cost of environmental remediation in the western part of nickel is estimated to be between $ 1bn and $ 2bn, including the cost of closing, repairing and future site monitoring plans for key mines, smelters and refinery sites.
Some analysts believe BHP Billiton could shut down Western nickel if it weren\'t for environmental responsibility.
The environmental act is also why Nickel West was not included in South32 (OTCPK:SOUHY)
The stripped vehicle must belong to it.
Core assets in 2015.
Analysts predict that Nickel West will hurt the credit rating of Nande 32.
At present, the global nickel supply is about 2.
1 million metric tons, distributed almost evenly in categories 1 and 2.
High purity of class 1 nickel (99.
More than 8% nickel)
This makes it more suitable for battery manufacturing.
Electric vehicle batteries require very pure raw materials, while the cathode of electric vehicle batteries containing nickel relies on nickel sulfate.
The latter is produced when nickel is dissolved in sulfuric acid in the presence of oxygen, which contains about 22% of nickel.
The first class of nickel used for the production of nickel sulfate is usually a powder or coal ball to optimize the reaction time between nickel and sulfuric acid.
In 2017, about 350 metric tons of nickel powder and coal balls were available for the production of 300 to 350 metric tons of nickel sulfate for all purposes.
About half of nickel sulfate was used in the production of electric vehicle batteries.
McKinsey, an international management consulting firm, estimates that with the annual production of electric vehicles reaching 31 million units in 2025, the annual battery demand for class 1 nickel may soar from 33 Kt in 2017 to 570 Kt in 2025: Source: the future of nickel: the class act because the current nickel price does not support capacity expansion, it seems likely that the gap between McKinsey and CoA in the production of grade 1 nickel is likely.
As mentioned earlier, the highest cost is
An effective way to produce nickel sulfate is through the dissolution of refined nickel powder and coal balls, which is why nickel moves west and downstream.
It is currently the world\'s largest producer of nickel powder and coal pellets: Source: BHP Billiton Nickel West can also obtain sulfuric acid from Kalgoorlie smelter and can take advantage of export opportunities, because Australia has signed free Japan and South Korea with the three largest sulfuric acid producers and consumers, namely China.
Regarding the price, nickel sulfate currently attracts a significant premium: Source: Ardea resources with all this in mind, BHP Billiton plans to relocate west nickel as a supplier in the global battery industry: Source: BHP Billiton Nickel West expects the company to sell 90% of nickel sulfate by the end of 2019, two years earlier than previously expected.
With respect to cobalt, West Nickel can develop its production of cobalt and sell it as Cobalt sulfate.
It can achieve this by developing cobalt circuits in Kwinana, promoting Cobalt Recovery in Kalgoorlie, and adopting third-party cobalt concentrate.
I think a potential source for the latter is the nearby Kalgoorlie Nickel Project (KNP)
Ardea Resources (OTCPK:ARRRF)
: Source: Ardea resource KNP is the largest cobalt resource in Australia with 773 metric tons at 0.
05% cobalt and 0. 70 % Nickel.
However, it is also very likely that Ardea will decide to produce nickel and cobalt sulfate separately, as the company recently released a pre-production
Feasibility study of the Goongarrie project as part of the KNP: Source: ArdeaSpeaking at the resource stocks Sydney event in May 2018, said Brett Clark, managing director of Ardea
Although BHP Billiton\'s nickel business is on the path of a major transformation, it still has no
The core of the group.
At the end of 2017, the company said it was just looking for the right time to sell.
In terms of financial position, Nickel West generated revenues of $ 952mn in the fiscal year ended June 30, 2017 and booked potential revenues of $ 44mn.
Given that nickel prices have improved significantly over the past year, the results of FY18 should be better: Source: Information from January 2018, according to Deutsche Bank, before the cost of rehabilitation, the value of Nickel West may be around $ 690mn.
In the next decade, the demand for electric vehicle batteries will greatly promote the demand for Grade 1 Nickel, resulting in a serious shortage.
Different prices for class 1 and Class 2 nickel may occur because Class 1 is more suitable for battery manufacturing and therefore should attract a premium.
Nickel West is in a unique position to benefit from the electric car boom, as it is the world\'s largest producer of nickel powder and coal balls, the cheapest option for nickel sulfate for electric vehicle batteries.
That\'s why it makes a lot of sense for BHP Billiton to move downstream through the 100,000-ton nickel sulfate facility, and if there is enough demand, its capacity could double.
Ultimately, however, Nickel West is not suitable for the long term of BHP Billiton
The long-term strategy and group are looking for buyers again.
I think for large mining groups like Glencore, Chinese battery producers looking for vertical integration, and even large and medium-sized nickel miners looking for growth or regional integration, this business could be a
BHP Billiton can also take the same path as South32 and list Nickel West as a separate entity.
The latter will certainly attract a lot of interest, as there are very few first-class nickel producers listed, not to mention nickel sulfate producers, a means of investing in the prosperity of electric vehicles.
As early as 2014, when BHP Billiton (BHP) last planned to sell nickel to Western markets, analysts estimated the business to be valued at about $ 340mn.
In January 2018, Deutsche Bank set the figure at $ 690mn before the cost of rehabilitation.
I think with the rapid growth of electric vehicles, Nickel West will become more valuable and will definitely add value to BHP Billiton.
Disclosure: I am/We are long ARRRF.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.
Editor\'s note: This article discusses one or more securities that are not traded on major US securitiesS. exchange.
Please note the risks associated with these stocks.
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