BHP will be suspending operations at its Australian nickel assets as a result of lower prices and an oversupply of the base metal.
It said the decision to put production at Nickel West and West Musgrave on hold would be reviewed in 2027.
The decision, announced by BHP yesterday, could result in job losses at the two operations although some affected employees would be offered the option of placement across the group’s other operations.
The West Musgrave nickel mine was in the early stages of execution after BHP acquired it last year as part of the OZ Minerals acquisition. It had been earmarked to be a feed source to the Nickel West smelting and refining assets.
BHP said yesterday that it was suspending operations at the two Australian nickel assets on hold.
“The decision to temporarily suspend Western Australia Nickel follows oversupply in the global nickel market. Forward consensus nickel prices over the next half of the decade have fallen sharply reflecting strong growth of alternative low-cost nickel supply,” said the company.
The suspension of BHP’s nickel operations in Australia would be with effect from October this year and reviewed in February 2027.
During the period of suspension of operations, BHP “will continue to support its workforce and local communities” in addition to investing up to $300 million (R5.4 billion) per year “following completion of a transition period to support a potential re-start” of operations at the Western Australia Nickel projects.
“We understand this is a challenging period for the Western Australia Nickel team and surrounding communities,” said Geraldine Slattery, BHP’s president for Australia.
“Every front-line employee will be offered another role within BHP, and best endeavour will also be made to identify redeployment opportunities for other employees engaged in the day-today operations of Western Australia Nickel.”
Since early this year when BHP announced a review programme for the Western Australia Nickel division, the company had explored options to stem losses in the short-term and identify a viable path forward for the business.
However, the company had “not been able to overcome the substantial economic challenges driven by a global oversupply” of nickel.
Nickel production from Nickel West had increased by 4% in 2023 due to the increased proportion of concentrate and matte products and inventory drawdowns.
During the suspension of operations between October 2024 and February 2027, BHP would suspend mining and processing operations at the Kwinana nickel refinery, Kalgoorlie nickel smelter and Mt Keith and Leinster operations.
Further development of the West Musgrave project would also be on hold.
The company would implement a care and maintenance programme to ensure the safety and integrity of the mines and related infrastructure.
It would, however, continue to invest in exploration to extend the resource life of Western Australia Nickel and preserve optionality.
That would be in addition to offering Western Australia Nickel front-line employees new roles “within BHP or the choice of a redundancy and establish a AU$20 million Community Fund to support” communities during the temporary suspension.
BUSINESS REPORT