BHP suspending WA nickel operations amid global glut

Mining giant BHP will mothball its West Australian nickel operations due to a global oversupply of the metal and plummeting prices.

The company on Thursday announced its Nickel West operations and the West Musgrave project will be temporarily suspended from October.

It was a challenging time for the WA nickel team and the surrounding communities, BHP's Australia president Geraldine Slattery said.

"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," she said.

"We have made the difficult but necessary decision to temporarily suspend the Nickel West operation and West Musgrave project."

BHP said it would review the decision by February 2027.

In the meantime, it has promised to support its workforce and the local communities near its operations.

Western Australia Nickel frontline employees will be offered other jobs at BHP or they can choose to take a redundancy package.

The Big Australian will also set up a $20 million fund to help local communities hit by the closure.

BHP will also spend about $450 million per year maintaining its mothballed mines and infrastructure to enable a potential restart.

Mining and processing operations affected are the Kwinana nickel refinery, the Kalgoorlie nickel smelter, the Mt Keith and Leinster mining operations and the West Musgrave project.

"(WA) remains an important investment destination for BHP globally, with investment in the state expected to be greater than $12 billion over the next five years," Ms Slattery said.

"We will continue to work with all of our (WA) partners to advance the economic prosperity of the state."

Federal Resources Minister Madeleine King said the decision would have a substantial impact on the workers and communities of Kwinana, Kambalda and Kalgoorlie.

"The decision is disappointing," she said.

"It's a hard day for workers and WA and it reflects the extreme volatility in global nickel markets."

Global nickel prices averaged more than US$25,000 a tonne in the 18 months from the start of 2022.

It is now US$16,725 a tonne.

The company has invested about $4.4 billion since 2020 to prop up its WA nickel arm and reorient its production to the battery and electric vehicle market.

This included establishing the nation's first nickel sulphate plant to enhance downstream infrastructure, building two new mines and investing in the development of two solar farms and battery storage.

Lower global nickel prices mean the business is likely to report an underlying loss of about US$300 million before tax for the 2022/23 financial year.

BHP announced plans to review the WA operation in February.

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