BHP Suspends Nickel West Operations and West Musgrave Project

Mining giant BHP (ASX:BHP,NYSE:BHP,LSE:BHP) said on July 11 that its Nickel West operations and West Musgrave project, together known as Western Australia Nickel, will be temporarily suspended starting in October.

The transition period will begin in July, with handover activities targeted for completion by the end of the year.

“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,” said Geraldine Slattery, BHP Australia president.

Nickel prices trended down through 2023 and began 2024 on a low note. At the time, S&P Global and other news outlets reported on the closure of operations and curtailing of production by nickel miners all over the world.

“Low prices in a market awash with Indonesian supply,” was singled out as a major cause.

BHP said Western Australia Nickel has recorded negative cash flow since 2020, and is expecting to report an underlying EBITDA loss of approximately US$300 million in the financial year ended on June 30.

The company also cited weather-related issues at its Mount Keith site, which is among the affected areas during the suspension, along with the Kwinana nickel refinery, Kalgoorlie nickel smelter and Leinster operations.

However, Slattery shared that since the review of Western Australia Nickel in February, the company has explored options “to stem losses in the short-term and identify a viable path forward for the business.”

Three thousand jobs are reportedly at risk at Western Australia Nickel, but BHP is making efforts to mitigate the situation. It said it will offer frontline employees new roles within the company, and has also pledged to identify redeployment opportunities for those who work in the day-to-day operations of Western Australia Nickel.

A community fund amounting to AU$20 million will be established by BHP to support the region during the suspension. The company also made it clear that a potential restart may happen and that it will continue to invest approximately AU$450 million per annum in the Western Australia Nickel facilities.

The decision to temporarily suspend Nickel West and West Musgrave will be revisited in February 2027.

“Western Australia remains an important investment destination for BHP globally, with investment in the State expected to be greater than AU$12 billion over the next five years. (We) will continue to work with all of our Western Australian partners to advance the economic prosperity of the State,” Slattery ended.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.