BHP sets nickel decision deadline

BHP has set a timeline for a review into its troubled Nickel West operations, as the company navigates a depressed market for its product.

A strategic review of BHP’s nickel operations has been ongoing for months, as the company explores its options for the future of Nickel West and the West Musgrave nickel-copper development acquired in its deal for OZ Minerals.

In its quarterly report today, BHP said it expected to update on Nickel West’s future in its full year results in August.

In the meantime the company’s review of its nickel assets is ongoing, with a focus on cash preservation.

“This includes optimising operations and maintenance schedules, reviewing capital plans, and reducing contractor spend and equipment hire,” BHP said.

“Our review also includes assessing the potential to place Nickel West into a period of care and maintenance and the phasing and capital spend for the development of the West Musgrave project.”

Nickel West is the state’s largest nickel operation, employing more than 3,000 people, and the cornerstone of BHP’s nickel business.

BHP produced 19,000 tonnes of nickel last quarter, down four per cent, and realised an average price of $US16,581 per tonne for its nickel metal product.

Australian nickel has been plagued by an influx of cheap production from Chinese-backed Indonesian projects, which has severely impacted the profit margins of local operators.

US ambassador Caroline Kennedy used a speech to a battery minerals conference in Perth yesterday to decry the situation, accusing Chinese state-owned companies of exploiting Indonesia.

BHP leadership has previously taken the view that the situation is likely to play out “for years ahead”.

Meanwhile, the major miner remains on track for its iron ore production guidance and has received an average price of $US104.43 per wet metric tonne over the financial year to date.

That’s despite a six per cent fall in production last quarter as a result of environmental impacts and development activity.

“Western Australian Iron Ore, the lowest cost iron ore producer globally, delivered another consistent period of production despite heavy rainfall,” BHP chief executive Mike Henry said.

“We continue to invest in improvements to our rail and port operations, which are essential for growth in the medium term to 305 million tonnes per annum and beyond.”

The South Flank ramp up remains on track to meet full production capacity of 80 million tonnes per annum by the end of the year.

BHP shares were trading 1.6 per cent higher at $45.16 this morning.