Global mining conglomerate, BHP Group, has invested $40 million in a Tanzania nickel project, UK-based private company Kabanga Nickel said on Monday.
BHP will initially invest $40 million in Kabanga Nickel and $10 million in Lifezone Limited that owns the hydronet processing technology for the mineral.
Kabanga said the hydromet technology, which it will use in its refinery, is a greener way to produce metal than energy-intensive smelting
The investment will give the Australia-based company an 8.9 percent stake in Kabanga, which can increase to 17.8 percent after it makes an additional $50 million investment.
“This investment secures access to a world-class nickel sulphide resource and is aligned with BHP’s strategy to capture opportunities in future-facing commodities,” a BHP spokesperson said.
Nickel is a mineral that is traditionally used in the manufacture of stainless steel, but it is now being used as a key component in lithium-ion batteries, allowing electric vehicle makers to cut their reliance on the use of cobalt, which is more expensive and has a less transparent supply chain.
BHP’s purchase of a stake in Kabanga values the project at $658 million and it marks a sharp strategy turnaround, as the Anglo-Australian firm had planned to exit the nickel business to focus on other commodities when it put its Nickel West unit in Australia up for sale in 2014.
The investment is modeled as a partnership with the Tanzanian government, which has a 16 percent shareholding through a local partnership entity, Tembo Nickel Corporation.
Kabanga, which expects to start mineral production by 2025, projects a minimum annual output of 40,000 tonnes of nickel; 6,000 tonnes of copper, and 3,000 tonnes of cobalt.
Globally, the demand for nickel, a key component in electric vehicle batteries, is projected to increase.
The investment by the world’s biggest miner comes when the East African nation is rebuilding frayed trade ties with the mining industry amid soaring global demand for nickel.
According to Fitch Solutions, Nickel prices are expected to hit record highs by 2027 having fetched $20,000 a tonne from less than $14,000 in January 2020 as consumers across the world embrace electric vehicles.
Analysts at Delloite forecast that electric vehicle sales globally are set to grow by at least 12-fold to 31.1 million by 2030.
Tanzania’s mines minister Doto Biteko said the country aims to become “an important hub for critical decarbonisation minerals.”