Around 1,600 workers at the company’s Nickel West operations are at risk
AUSTRALIAN mining group BHP is suspending its Western Australia nickel operations, putting 3,300 jobs at risk.
The largest metals and mining company in the world has taken a hit in the nickel market, which has remained volatile since 2020 due to oversupply from Indonesia.
BHP holds the second-largest nickel sulphide resources globally and produced around 80 kt of nickel last year.
It plans to close its Nickel West operations and West Musgrave project but says it will continue to invest in nickel exploration in Westen Australia.
There are around 1,600 frontline staff employed by BHP at these locations and they have been offered the choice of a new role within the company or voluntary redundancy.
The company plans to establish a A$20m (US$13.5m) community fund to support local communities, which include traditional lands of the Ngaanyatjarra, Tjiwarl and Wiluna peoples, during the suspension.
Geraldine Slattery, BHP’s Australian president, said: “Since BHP announced a review of Western Australia Nickel in February, we have explored options to stem losses in the short-term and identify a viable path forward for the business.”
She added: “We will continue to invest approximately A$450 million per annum in the Western Australia Nickel facilities to enable a potential restart.”
Oversupply and underperforming
BHP’s Nickel West operations made underlying earnings of US$200m last year before interest, taxes, depreciation, and amortisation (EBITDA), half of what it made in 2022. The company said that Western Australia Nickel has recorded negative cash flow every year since 2020.
BHP attributed the downturn to weather-related issues at its Mt Keith site and slow economic growth due to Indonesian oversupply.
Indonesia’s production of nickel has grown rapidly since its ban on nickel ore exports in 2020. Its share of the market is expected to grow to 44% by 2027.
An operational shake-up
As part of the suspension, BHP plans to suspend mining and processing operations at the Kwinana nickel refinery, Kalgoorlie nickel smelter and the Mt Keith and Leinster operations. It also plans to halt development of the West Musgrave project.
The company has put in place plans to “reorient” its Western Australia Nickel production to the battery and EV market. This includes building Australia’s first nickel sulphate plant, two new mines, and investing in solar energy and battery storage.
Operations at Nickel West and the West Musgrave project will cease in October, and BHP will revisit plans for a possible reopening before February 2027.