Looking to buy BHP shares? Here’s how the miner is gearing up to secure its share of booming EV demand

A woman smiles as she powers up her electric car using a Tritium fast charger

A woman smiles as she powers up her electric car using a Tritium fast charger

The BHP Group Ltd (ASX: BHP) share price has historically been influenced by the price for iron ore. But another commodity could soon have an important role to play.

BHP may be best known as an iron ore miner, however, it has exposure to other commodities such as copper and nickel.

According to reporting by the Australian Financial Review, BHP Nickel West (owned by BHP) is going to spend more on exploration than it has in the past 15 years.

The reason for the ramp-up is the strong demand for electric vehicles. This could mean good things for nickel.

Untapped resource

The asset president of BHP Nickel West, Jessica Farrell, made some promising comments at the Diggers and Dealers mining conference this week.

Farrell said:

We have a large nickel sulphide resource with in excess of 7.4 million tonnes of nickel in the Agnew-Wiluna belt that still remains largely unexplored.

That’s exciting. We have budgeted a significant uplift in exploration spend over the next two years, which we expect will advance many of our targets. To underscore this point, this year will be the highest annual spend for exploration in Nickel West since BHP acquired the WMC assets in 2005, a testament to the focus and commitment BHP has to its nickel business right now.

According to reporting by the AFR, BHP has 120,000 hectares of tenements within the Agnew-Wiluna belt in WA. Farrell continued:

This is a highly prospective strip, approximately 150 kilometres long … and has a number of deposits that we are looking to understand further and potentially mine.

Our acquisition of the Honeymoon Well and Albion Downs tenements in 2020 continues to drive our growth plans and drilling to inform our mine studies.

Global outlook

Some of the major car companies like Tesla and Ford have reportedly signed agreements with some Australian miners, including BHP. The company has also signed agreements with Toyota.

The AFR reported that Russia supplies around a fifth of battery-grade nickel globally, with its supply disrupted due to the invasion of Ukraine.

Yet, the demand for nickel is expected to keep rising. This could be helpful for the BHP share price.

Farrell said:

Electrification of autos is gathering pace, and we expect that by 2030, around 60 per cent of all car sales will be electric. We expect that by 2040, 90% of car sales will be electric. The dominant battery chemistry powering this global fleet is expected to rely on nickel.

Latest nickel update

BHP said that in the three months to 30 June 2022, nickel production was up 1% to 18.8kt. There was higher volume due to reduced COVID-19 labour impacts.

The resources giant also said that the nickel price in FY22 was 43% higher than FY21.

Production in FY23 is expected to be between 80kt to 90kt, weighted to the second half of the year due to planned smelter maintenance in the first half.

BHP share price snapshot

Over the last month, the BHP share price has fallen around 3%.

The post Looking to buy BHP shares? Here’s how the miner is gearing up to secure its share of booming EV demand appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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