BHP flags nickel cuts

BHP has become the latest nickel producer to review its operations in response to the market downturn, while its much larger iron ore business has reported a lift in quarterly production.

“The nickel industry is undergoing a number of structural changes and is at a cyclical low in realised pricing,” BHP said in its December quarter report.

“Nickel West is not immune to these challenges.”

The company said its nickel operations were being actively optimised and courses of action being evaluated to mitigate the impacts of the sharp fall in nickel prices.

It also flagged a write-down in the value of its Nickel West assets, which include the Mt Keith and Leinster mines in the Goldfields, the Kalgoorlie smelter and the Kwinana refinery.

“Given the market conditions, a carrying value assessment of the group’s nickel assets is ongoing, and a further update will be provided with the release of the financial results on 20 February 2024,” it stated.

BHP’s update comes after First Quantum Minerals and Panoramic Resources announced this month they were halting production at their nickel mines in Western Australia.

The market weakness has affected other battery metals such as lithium, with Albemarle scaling back the expansion of its Kemerton refinery and Core Lithium halting production at its Finniss mine.

BHP said production guidance for Nickel West remains unchanged at between 77,000 and 87,000 tonnes for the financial year to June 2024.

Similarly, it has maintained annual production guidance for its WA iron ore business at between 282 million tonnes and 294mt (on a 100 per cent basis).

That was after a 4.8 increase in December quarter production to 72.7mt compared to the September quarter.

This was largely a return to normal production levels, after the previous quarter was adversely affected by one-off factors.

These included the continued tie-in activity for its rail technology program and the impact of the ongoing ramp up of the Central Pilbara hub, which comprises its South Flank and Mining Area C operations.

South Flank, which is BHP’s newest mine, is on track to ramp up to full production capacity of 80mt per annum by the end of FY24.

The planned tie-in of the Port Debottlenecking Project is on track to be completed in CY24, following commissioning on December 7.

Chief executive Mike Henry said BHP had a solid first half operationally.

“WA iron ore production was up five per cent quarter-on-quarter, while first half copper production rose seven per cent reflecting a record half at Spence and ongoing strong performance and additional tonnes at Copper South Australia,” he said.

“NSW Energy Coal had its best first half in five years, while BMA (the Queensland metallurgical coal business) had a tough six months following significant planned maintenance and low starting inventories.

“At Nickel West, we are evaluating options to mitigate the impacts of the sharp fall in nickel prices.”

Mr Henry said BHP progressed its growth agenda during the quarter with ongoing construction of the Jansen mine in Canada and the sanction of Jansen Stage 2, which will double its planned potash production capacity.