Mining giant BHP has announced the temporary suspension of its nickel operations in Western Australia, citing challenging market conditions and a sharp decline in global nickel prices.
The decision, set to take effect in October 2024, will significantly impact workers and communities in Kwinana, Kambalda, and Kalgoorlie.
The suspension comes as a response to extreme volatility in the global nickel market.
Nickel prices have plummeted from an average of US$25,000 per tonne in early 2022 to the current US$16,725 per tonne, putting substantial pressure on BHP’s Nickel West operations.
Despite efforts by the Australian government to support the nickel sector, including adding nickel to the critical minerals list and introducing a production tax incentive, the scale of commercial difficulties faced by Nickel West has necessitated this temporary halt.
BHP has committed to supporting its workforce during this transition.
The company plans to redeploy workers who wish to continue with BHP and will invest approximately US$300 million annually to maintain the facilities for a potential restart.
Additionally, BHP will establish a $20 million Community Fund to support local communities affected by the suspension.
Geraldine Slattery, BHP‘s President Australia, acknowledged the challenges faced by the Western Australia Nickel team and surrounding communities.
She stated: “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.”
The Australian government has expressed disappointment but welcomes BHP’s commitments to its workers and local communities.
The company will continue to support local supply chains, pay royalties to First Nations communities, and work with the Western Australian government to support skills and resource investment in future projects.
BHP intends to review the decision to temporarily suspend its Western Australia Nickel business by February 2027.
The move reflects the broader challenges facing the Australian nickel industry, as global oversupply and shifting market dynamics continue to impact producers.
