Mining giant BHP has suspended its large-scale nickel operations in Western Australia but has pledged to protect the livelihoods of the division’s 2,500 workers.
The giant made the shocking announcement on Thursday afternoon, citing a global surplus of nickel as the reason for the temporary closure.
“Like other companies in the Australian nickel sector, we have been unable to overcome the significant economic challenges caused by a global nickel oversupply,” said Geraldine Slattery, president of BHP Australia.
Nickel is a key mineral used in electric vehicle batteries, but the influx of cheap nickel from Indonesia has led to lower prices and increased pressure on relatively expensive Australian operators.
Global nickel prices averaged more than $25,000 per tonne in the 18 months to early 2022 and now stand at $16,725 per tonne.
The company, which mines iron ore, coal, copper and nickel, will suspend mining and processing activities at its Kwinana nickel refinery, Kalgoorlie nickel plant and operations at Mt Keith and Leinster, and halt development of the West Musgrave project.
For the financial year ended June 30, 2024, BHP reported an underlying loss of about $450 million at its nickel division.
The company will suspend operations until February 2027.
In a shock announcement, mining giant BHP has suspended its massive nickel operations in Western Australia
BHP said it would offer its frontline nickel workers redeployment options at other company sites or a severance package.
“Each frontline employee will be offered another role within BHP and we are committed to finding redeployment opportunities for other employees involved in the day-to-day operations of Western Australia Nickel,” the company said.
The company will establish a $20 million community fund to support local communities and businesses affected by the suspension.
It is understood that around 400 employees will remain in the nickel division and will resume operations when market conditions improve.
The mining giant said a global surplus of nickel had forced it to stop mining the mineral
The company will invest $450 million annually in the division to enable a restart.
Natural Resources Minister Madeleine King called the decision “disappointing.”
“The Albanian government has worked with BHP and the wider nickel sector on policies that would support continued Australian nickel production,” she said.
‘In February, we added nickel to the list of critical minerals, making nickel projects eligible for the $4 billion Critical Minerals Facility.
‘We also announced the tax incentive for the production of critical minerals in the May budget.
‘However, it is clear that the scale of the commercial difficulties faced by Nickel West as a result of developments in the global nickel markets has led to the temporary suspension announced by BHP today.’