Mining giant BHP will mothball its Nickel West operations across WA from October amid ongoing depressed prices for the battery metal.
Mining giant BHP will mothball its Nickel West operations across Western Australia from October amid ongoing depressed prices for the battery metal.
The decision will affect about 3,000 staff at the miner’s Goldfields operations and Kwinana Nickel Refinery. These employees will be offered redeployment or a redundancy.
BHP revealed to the market late on Thursday the oversupply of nickel was behind the decision.
The miner has been re-evaluating the future of its nickel business all year due to falling prices, which resulted in all other nickel miners in WA except Glencore scaling back or mothballing their operations.
BHP Australia president Geraldine Slattery said the miner had explored options to stem short-term losses.
"We understand this is a challenging period for the WA nickel team and surrounding communities," she said.
"Every frontline employee will be offered another role with BHP, and best endeavours will also be made to identify redeployment opportunities for other employees engaged in the day-to-day operations.
"Like others in the nickel sector, we have not been able to overcome the substantial economic challenges driven by a global oversupply of nickel."
Affected sites include the Kwinana Nickel Refinery, Kalgoorlie smelter, Mount Keith and Leinster mining operations, and the West Musgrave development.
During the suspension, BHP will spend $450 million a year following a transition period in an effort to re-start the business.
It will also establish a $20 million community fund to support affected towns - likely Leinster, Kambalda and Kalgoorlie - during the suspension.
The decision will be reviewed by February 2027.
The shutdown comes after several big investments in the Nickel West business.
BHP invested more than $100 million upgrading its Kwinana refinery in 2021 to produce nickel sulphate, designed to meet the needs of battery manufacturers for electric vehicles.
The company has also upgraded its nickel mines and the established renewable energy facilities at its mine sites.
A flood of cheap Chinese-backed nickel from Indonesia has hampered WA's price-sensitive nickel producers this year.
After a boom period through to the end of 2022 where the price surpassed $US35,000/tonne, nickel has languished between $US16,000 and $US18,000/tonne this year.
That has led to First Quantum Minerals, Panoramic Resources, Wyloo Metals, and IGO curtailing operations in WA.
In February, Glencore kept faith in its Murrin Murrin nickel mine, which turned out a $US155 million profit last year, down about $US300 million from 2022.
As well as the nickel closures, WA’s resources sector has been rocked by shutdowns at several other major operations.
Mineral Resources announced last month it was closing its iron ore mines in the Yilgarn region, leading to the loss of 1,000 jobs, while Alcoa of Australia announced the closure of its Kwinana alumina refinery with a loss of 1,200 jobs.
The impact on the jobs market has been insulated by the buoyant conditions across most other parts of the mining and resources sector, especially iron ore mining in the Pilbara.
The nickel downturn has highlighted several misguided takeover deals in the sector.
BHP paid $9.6 billion for OZ Minerals in 2023.
This included OZ’s copper operations in South Australia, which continue, along with its West Musgrave nickel project in the eastern Goldfields.
IGO paid $1.1 billion in 2021 for pure-play nickel company Western Areas.
It has since shut down all the assets it acquired from Western Areas.
Another acquisitive company has been Wyloo Metals, owned by Andrew and Nicola Forrest’s private company, Tattarang.
It bought ASX company Mincor Resources for $602 million last year and has since shut down Mincor’s operations.
Wyloo also paid $423 million for Canadian nickel company Noront Resources in 2022.
In that case, it outbid BHP, which was keen at the time to expand its nickel operations.
