Australian mining giant BHP to suspend Nickle West operations amid global glut

(MENAFN) The Australia-headquartered mining giant BHP announced on Thursday that it would temporarily suspend its Nickel West operations and the West Musgrave project in Western Australia starting from October this year. This decision comes amid an oversupply in the global nickel market, with BHP planning to review the situation by February 2027.

In a statement, BHP explained that the temporary suspension of its Western Australia Nickel operations is a response to the significant drop in forward consensus nickel prices, which have declined sharply due to the strong growth of alternative low-cost nickel supplies. This market shift has influenced the company's strategic decision to halt operations temporarily.

During this suspension period, BHP emphasized its commitment to supporting its workforce and the local communities affected by the decision. The company has pledged to invest approximately 300 million U.S. dollars (around 443 million Australian dollars) annually after a transition period, with the aim of potentially restarting the Western Australia Nickel operations in the future.

The transition period is set to begin in July, leading up to the suspension of operations in October. The handover activities associated with the temporary suspension are expected to be completed by December. This suspension will affect several key components of BHP's operations, including the Kwinana nickel refinery, Kalgoorlie nickel smelter, Mt Keith and Leinster operations, as well as the development of the West Musgrave project. BHP acquired the West Musgrave project last year as part of a 9.6-billion-Australian-dollar (approximately 6.5 billion U.S. dollars) takeover of OZ Minerals.

Since the 2022 financial year, BHP has invested about 4.4 billion Australian dollars (around 2.9 billion U.S. dollars) to maintain Western Australia Nickel as a viable business, with a strategic focus on the battery and electric vehicle market. Despite these investments, the operations have consistently recorded negative cash flows each year during this period.

BHP's analysis indicates that the lower global nickel prices have significantly impacted the financial performance of Western Australia Nickel. As a result, the company expects to report an underlying EBITDA loss of approximately 300 million U.S. dollars for the financial year ending June 30, 2024. This financial strain has been a crucial factor in BHP's decision to temporarily suspend its nickel operations in Western Australia.

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