Closure to cut royalties, population

The closure of BHP Billiton's Ravensthorpe nickel operations will strip the state government of up to $20 million in mining royalties a year and is expected to cut the region's population by half.

The mining giant will put the mine and associated process plant into care and maintenance indefinitely, slashing 1,800 jobs from the small town in WA's south east.

Mr Hames said WA Premier Colin Barnett would take time out from his holidays to fly to the town on Thursday to discuss the situation with the local shire council and the affected workers.

Mr Hames said the cost of the closure to the people of WA would be significant, especially those in Ravensthorpe and the nearby towns of Jerdacuttup and Hopetoun.

Mr Hames said the government was aware companies had to make difficult decisions with the price of nickel dropping from $US52,000 per tonne in mid 2007 to $US10,000 a tonne now.

Royalties from the mines would leave a black hole of between $10 million and $20 million per year, but the effect of reduced payroll tax had not yet been calculated, Mr Hames said.

The WA government had contributed $18 million in funding to the town for a new school and waste water treatment plant ahead of the mine's opening.

The Commonwealth commitment to the town was estimated at $9.8 million for roads.

A number of infrastructure developments in Hopetoun are now up in the air following BHP's announcement.

The Water Corporation is currently constructing stage one of the $32 million waste water treatment plant, which will service the main strip of Hopetoun, however stage two of the project is now up in the air.

An expansion to the Hopetoun Primary School was also proposed after the new school reached capacity in the first term the school was opened.

Additionally, BHP last year opened the 54-unit Seaview Village to accomodate for an influx of people and was also in partnership for the development of a 50-unit Wavecrest housing estate.

Ravensthorpe shire president Brenda Tilbrook said she expects the shire's population size to halve.

"Our population has doubled in the last four years and I'm expecting it to probably go back to what it was four years ago," she said.

"Between the miners themselves and their families and their children and all the businesses, it's probably a thousand people."

The mine site is serviced by the inland towns of Ravensthorpe and Jerdacuttup and by Hopetoun on the Southern Ocean, 582km from Perth.

The nearest major town of Esperance is two hours' drive away.

"The state government built us a primary school in Hopetoun specifically because of BHP coming," Ms Tilbrook said.

"That's been open two years and it was about to open this year with 180 children in a couple of weeks. I would expect it might open with 50, so that's a huge impact on a community.

"There's a lot of people who have invested in Hopetoun and Ravensthorpe specifically to deal with the mine, so those people ... you know, their business just basically won't exist anymore."

Ms Tilbrook said it was lucky the community still had a very strong agricultural base.

"That was there long before BHP Billiton and will be there long after," she said.

"It was a great place to live and work and bring up your children four and a half years ago ... and it will still be a great place to live and work and bring up your children after they leave."

Meantime, Mines Minister Norman Moore said laterite nickel required high cost processing and he hoped the mine would be reopened if higher growth levels were indicated for China and the need for stainless steel was revived.