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By By James Regan
SYDNEY, Aug 9 (Reuters) - The rise of electric vehicles is driving the world's biggest mining house, BHP BHP.AX BLT.L , to switch gears and invest heavily in its long-suffering nickel business.
Eduard Haegel, division chief of BHP Nickel West, said the company planned to spend more than $43 million building a nickel processing plant near Perth, Australia as part of a broader plan to reposition the business around batteries.
Haegel told the "Diggers and Dealers" conference in Australia he expected demand for batteries used to power electric cars to account for about 90 percent of Nickel West's output within five or six years, replacing traditional markets, such as stainless steel makers.
"Electric vehicles currently account for a very small percentage of global production, but their sales are growing quickly," Haegel said in a speech.
This growth was driven by consumers' search worldwide for less polluting and more energy efficient technologies, and as battery prices fall, he added.
The production and use of electric cars is projected by global financial services firm Morgan Stanley (NYSE:MS) to rise to 2.9 percent of 99 million new vehicles in 2020 and to 9.4 percent of 102 million new vehicles in 2025, from 1.1 percent of 86.5 million this year.
By 2050, 81 percent of 132 million new auto sales will be electric, Morgan Stanley says.
Last year, BHP produced 85,000 tonnes of nickel, or just under 5 percent of world supply.
"We have concluded that Nickel West needs to reorientate towards a new industry," Haegel said.
Most electric vehicles rely on lithium-ion batteries, with the main component comprised mostly of nickel.
The new plant will convert nickel into a valuable form of sulfate. Nickel sulfate is a powder-like substance particularly suited for use in batteries, which consistently fetches a price premium over London Metal Exchange-traded nickel.
Just over two years ago 2,000 Nickel West workers were told to expect operations to end by 2019.