Why Nickel Could Play its Part in Lifting BHP’s Share Price | ASX:BHP

Over the last six months, BHP Group Ltd [ASX:BHP] shares have been rising comfortably on the back of the companies attractive portfolio around commodities such as nickel.

Yesterday, BHP’s share price was sitting at $39.66, up 2.49%.  But when markets opened today BHP shares had fallen 0.74% to 39.46, at the time of writing.

Anticipated growth in the battery sector is pushing global nickel markets into overdrive, as the highly sought after commodity is experiencing a shortage of nickel sulphide supply.

And this could play a part in lifting shares in BHP, and other nickel exploration companies.

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BHP’s nickel story

Nickel West is a nickel producing mine located in Western Australia. It includes all operations, such as mines, concentrators, a smelter and refinery processing.

Here, high-grade nickel sulphide ore is mined, and processed through a concentrator and dryer — in various mine locations in WA.

After this, the three components of nickel concentrate are taken to the Nickel West Kalgoorlie smelter, turning it into nickel matte, which is then refined into premium grade nickel powder by Nickel West Kwinana.

In a recent May announcement, BHP’s CEO Andrew Mackenzie spoke about its prospects:

For example, Nickel West, which we will now retain in the portfolio, offers high-return potential as a future growth option, linked to the expected growth in battery markets and the relative scarcity of quality nickel sulphide supply.’

BHP’s 2019 share price outlook

Mr Mackenzie summarised the outlook of BHP positively when he said:

While nobody can predict what will happen with absolute precision, I am confident BHP’s portfolio can thrive under almost all plausible outcomes in this changing world.’

Granted, Mr Mackenzie is likely biased in this situation. But on all accounts a company willing to adapt to its situation, is a company you might want to consider keeping an eye on.

Especially as the world looks for alternative ways to power the future.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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