BHP and ADC plan the future electrification of transport
BHP is collaborating with Automotive Data of China (ADC) - a subsidiary of China Automotive Technology and Research Center (CATARC), a globally prominent automobile technological research institute.
The two-year partnership will focus on the key drivers for the development of energy saving and new energy vehicles in China, such as - the manufacturing value-chain, efficiency, consumer attitudes and products development, battery chemistry, technical performance, the policy environment and the long-range outlook for electrification. The outcomes and insights identified will be shared with companies across the value chain in the next two years.
Nickel makes a vital contribution to the lithium-ion batteries that power electric vehicles (EVs), and Chinese demand for high quality nickel sulphate is expected to surge as the trend towards EVs accelerates further. BHP Nickel West is a fully integrated mine-to-market nickel business that produces some of the highest quality and lowest carbon nickel in the world, with over 75% of BHP’s nickel sold to electric battery material suppliers. BHP is investing in expanding its nickel operations and exploration activities as global demand is expected to grow.
BHP’s Vice President Market Analysis & Economics, Huw McKay commented: “As China’s electric car revolution continues to unfold, BHP is excited to be supporting ADC’s cutting edge research on this mega-trend. We are confident about the outlook for EVs in China, with a world leading policy-manufacturing-infrastructure-consumer eco-system in place to support rapid adoption. As one of the major global suppliers of nickel, BHP is well-positioned to help EVs thrive in the world’s largest auto market.”
Automotive Data of China Co., Ltd (ADC) General Manager, Feng Yi added: “Profound change is underway in the automotive industry, as energy saving and new energy vehicles continue to be a priority for the strategic development of the Chinese automotive industry over the next few years, playing a key role in achieving carbon neutrality in the sector. We are pleased that BHP and ADC have agreed to partner on ‘The Development of Energy Saving and New Energy Vehicles’ research project to jointly promote the high quality development of the automotive industry.
“ADC has been actively conducting in depth research in energy saving, low-carbon and green development strategies for the automotive industry by leveraging big data, models and algorithms. Our research continuously provides support to the industry as well as relevant government agencies for their strategic planning and decision-making.
“I believe the collaboration between ADC and BHP will contribute significantly to promote energy saving and the development of new energy vehicles, and we are confident that our partnership will benefit the industry immensely.”
BHP is committed to reducing emissions and has a company-wide target to reduce operational greenhouse gas emissions (Scope 1 & 2) by at least 30% (relative to FY2020 levels) by FY2030. Longer-term, BHP’s goal is to achieve net-zero operational emissions by 2050.
BHP deliberates ditching fossil fuels for greener mining
The world’s biggest miner, Australian-based BHP, is supposedly considering withdrawing from a multi-billion dollar contract, which would see the company generate more than US$2bn due to mounting pressure over aligning its business with ongoing climate concerns and ESG-compliance measures.
Exiting the agreement would mean BHP escalate its distancing from oil and gas and subsequently cut down on the amount of fossil fuels used by the company when mining.
It’s estimated that the petroleum business being debated upon could actually be worth around US$15bn but is still under talks to be put up for sale.
Global Mining Giant Considers Greener Future
BHP has made itself clear that it wants to avoid becoming unable to sell its assets. As competition within the market increases following higher numbers of oil giants wrestling with investors to deal with climate pressure, so too are the number of mining rivals looking to make environmental changes for the future.
However, BHP currently has the upper hand as a stalwart mining company that established itself back in the 1960s, allowing it the time to grow and dominate over other fast-appearing mining competition.
Mike Henry, BHP Chief Executive, has an optimistic outlook for the future of oil and gas despite worries over rising demand to align his business with the Paris Climate Agreement. Henry argues that prices remain promising due to a lack of industry-wide investment.
BHP’s petroleum business won’t be easy to say goodbye to. Forecasted to generate around 6% of profits during the ongoing financial year (US$2bn), and around US$1.6bn revenue produced by BHP petroleum in the six months leading to December 2020, BHP is due to take a hit no matter what agreement they choose.
On the other hand, distancing itself from thermal coal and petroleum would arguably aid the company’s case to possible - and valuable - investors who may be required to fund BHP’s increased output to places such as Australia and Mexico in the near future.
BHP considers cutting billion-dollar contract to aid climate
An exit away from petroleum has the potential to be “a powerful corporate catalyst,” says Dominic Kane, Analyst at JP Morgan.
“We believe an exit would likely ring-fence BHP’s exceptional cash flows for non-fossil fuel organic growth, mergers and acquisitions and generous shareholder distributions since BHP could avoid a major new capital investment phase this decade in petroleum.”
BHP is also set to sanction a giant US$5.7bn Canadian potash mine in August of this year, already seeing potash as a long-term substitute for gas and oil going into the future. The company has also previously announced plans to abandon its 80% share in its joint endeavour with Mitsui, owner of two lower-quality mines in Queensland, Australia.
BHP is scheduled to report its annual results on August 17, after which it may become clearer on whether the company will choose to focus its shift to a low-carbon economy or whether it will stay with its current contract into the coming year.