BHP, the world’s largest mining company, has thrown its weight behind a giant nickel project in Tanzania as it seeks to access the metals and minerals needed to electrify the world economy.
The decision to invest $ 100 million in private British miner Kabanga Nickel, who is developing the project, is a further shift in strategy for BHP, which has traditionally focused on less risky mining jurisdictions such as Australia, Chile and Canada that have been extensively developed.
It is also a recognition by BHP, which sold its last African asset in 2019, that in order to gain access to the best untapped mineral deposits, it will have to work in more challenging parts of the world and work with smaller companies.
Kabanga is considered the world’s largest development-ready, high-grade nickel sulphide deposit. However, it is in a remote location in the northwest of the country, near the border with Burundi and Rwanda, and lacks infrastructure.
It was previously owned by Canadian miner Barrick Gold and commodity group Glencore. They sold the project after being stripped of their retention license in 2018 by Tanzania’s former president John Magufuli, who introduced new mining laws.
The project’s new owner, Kabanga nickel, expects first production in 2025 and says the deposit has the resources to export at least 65,000 tons per year to nickel equivalent for more than three decades. It will also produce 4,000 tonnes of cobalt per year, another battery metal.
The global nickel market of 2.7 million tons per year is expected to grow rapidly due to the increasing popularity of electric vehicles. Demand for the metal, which is used in more powerful EV batteries, will grow 19-fold by 2040 if the world meets the Paris climate goals, according to the International Energy Agency.
Yet most of the increase in supply this decade will come from Indonesia, a market that is overwhelmingly powered by coal-fired electricity where Chinese companies are building nickel processing projects.
This led to a race to secure new resources of sustainable supply as companies in rich countries are forced to drastically reduce their carbon footprints.
Kabanga plans to refine the ore he produces in Tanzania by using a hydrometallurgy technology that he says is less polluting and carbon-intensive than other methods. This, it says, will eliminate the need to export the ore over long distances for processing in Europe or Asia, further reducing its carbon footprint.
“Through development of Kabanga. . . “Tanzania will play a growing role in supplying the battery metals needed to move into a global low-carbon economy,” said Kabanga Nickel CEO Chris Showalter.
Doto Biteko, Tanzania’s Minister of Minerals, said: “We are now ready to help the world with the production and refinement of the crucial metals that society needs, while creating skilled jobs and the economy of our country. benefit. ”
Under the agreement, BHP will invest $ 40 million to accelerate the development of the Kabanga deposit and a further $ 10 million in the hydrometallurgy refining process. Subject to certain conditions and milestones being reached, BHP will invest a further $ 50 million, giving it an 18 percent stake in Kabanga Nickel. It will value the project at about $ 650 million.
Mike Henry, CEO of BHP, wants the miner’s exposure to “future-oriented commodities” including copper, nickel and potash.
The company is reportedly in talks with billionaire Robert Friedland over the purchase of a large copper project in the Democratic Republic of the Congo. It also took an interest in a London-listed copper company developing a deposit in Ecuador.
In 2019, BHP reversed a decision to sell its Nickel West business in Australia and instead decided to invest in the production of nickel for the battery industry. Carmaker Tesla agreed last year to buy nickel for its batteries at the mine, as part of an effort to lock up supplies of the metal not controlled by China. BHP recently withdrew from the race to buy Noront, a company developing a major nickel project in Canada.