Jul 22, 2021
Shares of Australian miner BHP jump 3% after news of nickel supply deal with Tesla
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A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California.Justin Sullivan | Getty Images
In a statement on Thursday, BHP said one of its mines based in Western Australia, Nickel West, will be supplying the world's largest electric vehicle maker with nickel, a key raw material used in EV batteries.
"Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world's rising demand for electric vehicles," BHP Chief Commercial Officer Vandita Pant said in a statement.
BHP currently derives most of its earnings from iron ore, used predominantly to make steel.Read more about electric vehicles from CNBC Pro
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While there were no specifics on the deal amount, Tesla had said in June that it expects to spend more than $1 billion a year on raw materials for batteries from Australia, citing the country's responsible production practices, according to Reuters.
BHP claims to be one of the most sustainable and lowest carbon emission nickel producers in the
The mining giant currently supplies 85% of its nickel to global battery material suppliers, according to its website. It has also almost finished building a new plant which will produce nickel sulphate, a material used in the lithium-ion batteries that power electric vehicles, the website said.Outlook for nickel
Major miners are set to go bigger in the mining resources needed to decarbonize the global economy, Vivek Dhar, a commodity analyst from the Commonwealth Bank of Australia, told CNBC via email.
"EV batteries will certainly be critical and drive interest in copper and nickel in particular," he said.VIDEO2:5102:51Fidelity's Howitt discusses the future for Australia's mining firmsSquawk Box Asia
However, Peter O'Connor, metals and mining analyst at Shaw and Partners, was less bullish on the overall nickel sector, in terms of space for new players to increase their market share.
He said the nickel market is still very small, with long-term sales turnover of around $40 billion. Moreover, besides BHP, there are other key large players already crowding the market, such as Brazil's Vale and Russia's Norilsk Nickel, he told CNBC on Thursday.
BHP is listed in Australia, New York and London.
Senior resource analyst Gavin Wendt from MineLife told CNBC earlier this week he has a 12-month price target of 60 Australian dollars ($44) on BHP, which is currently at 51.40 Australian dollars. His comments came before the nickel supply deal with Tesla was announced.
"BHP's share price performance has been extremely strong and it is outperforming its fellow resource heavyweight, Rio Tinto," he said, referring to another major Australian miner.
"In fact, BHP has over the past 12 months outpaced the S&P/ASX 200 Index by around 14% – and it's trading not far off its all-time record high of $51.82 achieved in May, with its price up by around 36%," he told CNBC on email.
News Source: CNBC
New 'thematic all stars' ETF lets the market have a say in its holdings
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One exchange-traded fund provider is looking to take thematic trading to the next level.
Amplify's Thematic All Stars ETF (MVPS) launched July 21 with a mission to aggregate the most popular thematic stocks in the market into one ETF.
Up about 1% since its debut, the fund tracks an index managed by research firm ETF Action, which uses U.S. ETF ownership data to pinpoint the stocks and themes most popular with investors.
The ETF's top 10 holdings are currently Tesla, Nvidia, Square, Amazon, Alphabet, Enphase Energy, Zscaler, PayPal, Microsoft and Twilio. The holdings rebalance every month.
By buying this ETF, investors can rest assured their money is going to the hottest themes in the market, Amplify ETFs founder and CEO Christian Magoon told CNBC's "ETF Edge" on Monday.
"There's about 140 thematic ETFs out in the marketplace today here in the U.S. They own about 3,200 different stocks, so it can be very confusing to understand, what thematic ETF do I buy, how do I avoid pure-play stocks, how often should I rebalance?" Magoon said.
"The thought is this is almost like crowdsourcing a thematic core portfolio allocation from some of the smartest investors in the world, the ETF marketplace, and what they believe are the most valuable stocks and themes to have exposure to," he said.
MVPS' underlying index follows seven themes: disruptive technology; the evolving consumer; fintech; health-care innovation; the industrial revolution; sustainability; and a multitheme category.
Some stocks such as Tesla or Nvidia can be found in multiple themes, so ETF Action adjusts their positions accordingly to ensure that no stock makes up more than 5% of the index or ETF.
"Just owning all the themes is important because if you miss some of the best days in an individual theme, you may never get that back," Magoon said.VIDEO3:5803:58Amplify launches 'thematic all stars' ETF. How the strategy worksETF Edge