Mining giant BHP has suspended its vast nickel operations in Western Australia but has pledged to protect the livelihoods of the division’s 2,500 workers.
The giant made the surprise announcement on Thursday afternoon, citing a global supply glut of nickel as the reason for the temporary shutdown.
“Like others in the Australian nickel sector, we have been unable to overcome significant economic challenges driven by a global nickel oversupply,” said BHP Australia president Geraldine Slattery.
Nickel is a key mineral used in electric vehicle batteries, but a flood of cheap nickel from Indonesia has depressed prices and increased pressure on Australian operators with comparatively high costs.
Global nickel prices averaged more than US$25,000 per tonne in the 18 months since the start of 2022 and now stand at US$16,725 per tonne.
The company, which mines iron ore, coal, copper and nickel, will suspend mining and processing operations at its Kwinana nickel refinery, Kalgoorlie nickel smelter and Mt Keith and Leinster operations and suspend development of the West Musgrave project.
For the financial year ended June 30, 2024, BHP reported an underlying loss of approximately US$450 million at its nickel division.
The company will suspend operations until February 2027.
BHP said it would offer its frontline nickel workers opportunities for redeployment to other company operations or a severance payment.
In a shock announcement, mining giant BHP has suspended its vast nickel operations in Western Australia
“Each frontline employee will be offered another role within BHP and every effort will also be made to identify 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 workers will remain in the nickel division to restart operations if market conditions improve.
The mining giant said a global surplus of nickel has forced it to halt extraction of the mineral.
The company will invest $450 million a year in the division to enable its restart.
Natural Resources Minister Madeleine King called the decision “disappointing.”
“The Albanese Government has worked with BHP and the wider nickel sector on policy responses that would support ongoing Australian nickel production,” he said.
‘We added nickel to the critical minerals list in February, making nickel projects eligible for consideration under the $4 billion critical minerals facility.
‘We also announced the fiscal incentive for the production of critical minerals in the May Budget.
‘However, it is clear that the scale of the trading difficulties facing Nickel West due to developments in global nickel markets has led to the temporary suspension announced by BHP today.’