BHP suspends Nickel West operations in WA

Mining giant BHP will suspend its vast nickel operations in Western Australia, but has pledged to protect the livelihoods of the division’s 2500-strong workforce.

The behemoth made the shock announcement on Thursday afternoon, citing a global oversupply of nickel for the temporary shutdown.

“Like others in the Australian nickel sector, we have not been able to overcome the substantial economic challenges driven by a global oversupply of nickel,” BHP President Australia Geraldine Slattery said.

Nickel is a critical mineral used in electric vehicle batteries but a flood of cheap nickel from Indonesia has depressed prices and ramped up pressure on Australia’s comparatively high-cost operators.

Global nickel prices averaged more than US$25,000 a tonne in the 18 months from the start of 2022 and now sit at US$16,725 a tonne.

Supplied Editorial BHP Mount Keith Nickel West facility in Western Australia. Picture: BHP
Camera IconBHP will suspend operations at its Mount Keith Nickel West facility in Western Australia. BHP Credit: Supplied

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.

In the financial year to June 30, 2024, BHP reported an underlying loss of about $450m at its nickel division.

The company will suspend operations until February 2027.

BHP said it would offer frontline nickel workers redeployment opportunities to the company’s other operations or a redundancy payout.

“Every frontline employee will be offered another role within BHP and best endeavours will also be made to identify redeployment opportunities for other employees engaged in the day-to-day operations of Western Australia Nickel,” the company said.

The company will establish a $20m community fund to support local communities and business impacted by the suspension.

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Camera IconBHP is the world’s largest mining company, with operations in iron ore, coal, copper, potash and nickel. NewsWire / Brenton Edwards Credit: News Corp Australia

It is understood some 400 workers will remain in the nickel division to restart operations if market conditions improve.

The company will invest $450m a year into the division to enable a restart.

Resources Minister Madeleine King called the decision “disappointing”.

“The Albanese Government worked with BHP and the broader nickel sector on policy responses that would support ongoing Australian nickel production,” she said.

“We added nickel to the critical minerals list in February, making nickel projects eligible for consideration under the $4bn critical minerals facility.

“We also announced the critical minerals production tax incentive in the May Budget.

“However, it is clear that the scale of commercial difficulties Nickel West faces due to developments in global nickel markets has led to the temporary suspension announced by BHP today.”

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