BHP wants Australia to ban new petrol cars by 2035

Peter KerResources reporter

Nov 3, 2022 – 12.01am

Subscribe to gift this article

Gift 5 articles to anyone you choose each month when you subscribe.

Already a subscriber?

BHP wants a ban on sales of new petrol and diesel powered cars in Australia by 2035 and says governments should ensure the nation has the necessary infrastructure to support an increasingly electric car fleet.

BHP’s nickel asset president Jess Farrell will use the IMARC conference on Thursday morning to urge Australian states to adopt the electric vehicle policy announced by the Australian Capital Territory in July.

The ACT government has vowed to cease registration of cars that are not “zero emissions vehicles” by 2035 and wants at least 80 per cent of vehicles sold in 2030 to “produce zero tailpipe emissions”.

About 2 per cent of new vehicle sales in Australia last year were electric vehicles; an adoption rate far below global averages.

The ACT policy encourages uptake of battery electric vehicles – such as Teslas – and hydrogen fuel cell electric vehicles – such as the Toyota Mirai – by offering two years free registration upon purchase, no stamp duty and an interest free loan of up to $15,000 for the purchase of certain models.

“In Australia, Canberra was the first jurisdiction to mandate that all new cars must be electric by 2035, and with significant incentives. A decision we hope other states will replicate and, more importantly, support the infrastructure needed for its success,” Ms Farrell will tell the IMARC audience in Sydney.

“Every day, the world is moving closer to lower greenhouse gas emissions electric-powered transport.

“More governments around the world are increasingly committed to the critical minerals industry as the world seeks to decarbonise.

“Our State and Commonwealth support is critical, as we are competing internationally with governments that provide multi-billion dollar incentives to support battery value chains.”

For comparison, Victoria, Queensland and NSW all have a target for half of new vehicle sales in 2030 to be zero emissions vehicles, with Queensland aiming for 100 per cent by 2036.

Western Australia is aiming for zero emissions vehicles to comprise 25 per cent of new sales by 2026.

NSW, Victoria, Queensland and South Australia offer $3000 subsidies on new cars sales, while NSW has also offered stamp duty relief.

NSW is investing $209 million on electric vehicle charging infrastructure, Victoria is investing $19 million on charging infrastructure while the WA government has pledged to install charging stations at 49 locations around the state.

Critical minerals strategy

The Albanese government has promised to reduce taxes on electric vehicle purchases and has a consultation process underway.

Ms Farrell said BHP strongly supported the Albanese government’s decision to devote $50.5 million toward a critical minerals strategy in last week’s federal budget.

The comments come after BHP dramatically upgraded its forecasts for global adoption of electric vehicles earlier this year.

In mid-2021, BHP was forecasting 25 per cent of global vehicle sales in 2030 would be electric vehicles. It now expects 60 per cent of vehicle sales will be electric in 2030, rising to 80 per cent by 2035 and 90 per cent by 2040.

As recently as February 2021, BHP was forecasting that 17 per cent of the global light vehicle fleet would be electric in 2035; it now believes 45 per cent of the global fleet will be electric by then.

“This megatrend, combined with a firm [nickel] demand base from the traditional stainless and class 1 applications, means we anticipate demand for nickel in the next 30 years will be 200 per cent to 300 per cent of the demand in the previous 30 years,” Ms Farrell will tell the conference.

Those forecasts help explain why BHP is seeking to grow its exposure to some of the metals needed for electrification and decarbonisation; particularly copper and nickel.

BHP was last year the underbidder for Canadian critical minerals explorer Noront, and in August BHP lobbed an $8.3 billion takeover bid for South Australian copper miner OZ Minerals.

The OZ board rejected BHP’s takeover bid in the belief it undervalued their company’s long-term prospects, but the process may not be over, with OZ shares trading below BHP’s $25 per share offer price for the past eight days.

As recently as 2016, BHP was selling just 10 per cent of its Western Australian nickel to customers in the electric vehicle or battery segment, but that proportion has risen to 85 per cent since BHP invested in extra kit at its Kwinana nickel refinery to make the sort of nickel sulphate crystals that battery manufacturers prefer.

The company is also studying ways to increase the carbon sinkage rates at its Mt Keith nickel mine in Western Australia, where the mineralogy of the waste rock in the tailings dams naturally sucks carbon out of ordinary air.

BHP is investigating whether sinkage rates could be increased by tilling the tailings, heating the tailings or by chemical activation.

Ms Farrell said the potential for Mt Keith to be a carbon sink was an “exciting” opportunity for BHP.

Peter Ker covers resource companies for The Australian Financial Review, based in Melbourne. Connect with Peter on Twitter. Email Peter at pker@afr.com