BHP’s Kalgoorlie Nickel Smelter Damaged in Fire

Australian miner BHP (ASX:BHP,NYSE:BHP,LSE:BLT) has had a setback in its Nickel West operations in Western Australia, after its Kalgoorlie nickel smelter was forced to close after a fire ripped through the facility on the weekend.

As reported by local media, an estimated AU$10 million in damage was caused at the facility, with the fire taking four hours to be brought under control by local fire response teams.

Conditions were described by the Kalgoorlie fire station officer as very dangerous due to the nature of the facility — though no responders or workers at the site were injured during the fire, which is understood to have started in the facility’s furnace building on Sunday (September 23) afternoon.

Operations at the facility will remain suspended while BHP assesses the damage, with workers returning to work on Monday to work on recovery. No estimate for a resumption of operations has been released.

“People have returned to work at the Kalgoorlie Smelter today and the team is working on the recovery of safe operations,” a company spokeswoman told The West Australian.

“Our first priority is the safety of all our people and returning the plant to normal operations.”

The Western Australian Department of Mines, Industry Regulation and Safety has launched an investigation into the incident.

The Kalgoorlie smelter is a junction of operations for Nickel West, with three streams of nickel concentrate coming together from concentrators at Mt Keith, Leinster and Kambalda to be processed into nickel matte, with another facility processing it further to premium-grade nickel powder and briquettes containing 99.8 percent nickel.

In the last financial year, Nickel West produced 91,000 tonnes of nickel.

Kalgoorlie is home to BHP’s Nickel West operations, which earlier this year announced it would be embarking on an expansion program that would see new mines, upgraded facilities and a focus on nickel sulfate in a bid to cater to the booming battery metals market.

The company forecasts that by Q4 2019, its sales to the battery segment will make up almost 90 percent of all nickel sales — up from less than 60 percent at the start of this year.

On the LME, nickel — which has been the most resilient of the base metals during the trade war – was trading at US$12,840 a tonne as of Tuesday (September 25).

In Sydney, BHP was trading at AU$34.50 as of market close on Wednesday (September 26) AEST, up 1.17 percent.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.