Boliden Bets on Battery Boost as Electrification Gains Traction

(Bloomberg) -- Boliden AB, the mining company that traces its roots to a 1920s gold discovery in northern Sweden, is preparing for a future where everything from boats to cars and its own machines run on electricity.

Although the company’s mines mainly produce base metals needed for construction and manufacturing, Chief Executive Officer Mikael Staffas says a number of its assets fit perfectly into a world of large-scale battery manufacturing. Demand for cobalt could expand the lifetime of its Kylylahti mine in Finland and Boliden expects to see higher prices for nickel used in electric vehicles, Staffas said. But the biggest opportunity lies in copper.

“We can talk a lot about cobalt, but in any case it’s less than 1 percent of our business, so we are more excited about the fact that there will be a great need for copper when the world is electrified,” Staffas said in an interview at Boliden’s headquarters in central Stockholm. “We like that, a lot.”

The global race to develop rechargeable batteries has intensified as more and more vehicle makers move to produce electric cars. That has led to a surge in the prices of metals needed to produce them, such as cobalt, lithium and graphite. But the global electrification push is not just about batteries, and Staffas expects a long-term increase in demand for copper used in wires to have a larger impact on Boliden.

Boliden is Europe’s third-largest copper producer, and made 353,000 tons of the reddish metal in its smelters last year. The company, the sixth-biggest zinc producer in the world, also extracts nickel in Finland, a metal that is used in batteries too.

Higher Price

Staffas believes the nickel grade Boliden produces will command a separate, higher price as demand for the metal used in batteries increases. Currently, the company is being paid a slight premium for its sulphide-based nickel.

“I think the premium will be large enough to motivate two different nickel prices some time in the future,” Staffas said. “That’s an interesting division of the market that I believe will happen.”

Staffas assumed the CEO position on June 1, taking over after Lennart Evrell, who served for more than a decade. As a former head of Boliden’s mines, his most immediate task is to get better acquainted with smelting operations in Norway, Finland and Sweden. He sees no pressing need for any strategy shift, or large-scale acquisitions, although the company has a handful of assets it’s monitoring.

“We’re not afraid of buying new assets, but there’s no intrinsic value in just growing,” the CEO said. “I’ll never have a strategy that includes acquisitions, because that means I’d have to buy things, and then I’d pay too much. At least 80 percent of acquisitions in the mining sector are too expensive or made for the wrong reasons.”

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