By Peter Milne
Andrew Forrest’s Wyloo Metals in the latest nickel miner to shut down its West Australian operations due to low prices for the key steel and battery ingredient, forcing BHP to follow suit and close a processing plant.
Wyloo chief executive Luca Giacovazzi said its WA mines, bought in mid-2023 for $760 million, would enter care and maintenance mode on 31 May. It was the fourth such announcement this month as nickel producers reel from a price plunge of more than 40 per cent in 2023.
Andrew Forrest wants to invest in green hydrogen as well as battery minerals in an emissions-reduction business strategy.Credit: WEF / Greg Beadle
Forrest’s privately owned company plans to retain most of its 44 employees at its Cassini mine 130 kilometres south of Kalgoorlie and a group of mines about 50 kilometres south of the mining town into care and maintenance on 31 May and work with its mining contractor to redeploy its workers.
Wyloo is the major source of ore for BHP’s nickel processing plant at Kambalda.
BHP Nickel West Asset President Jessica Farrell said Wyloo’s decision made processing third-party ore into concentrate at Kambalda uneconomic. She said the circuit would shut down in June, with the loss of about 20 jobs. The plant will continue to dry concentrate from other miners.
Farrell said BHP’s WA nickel business was a complex combination of underground mining operations, third-party supply, on-site smelting and downstream refining.
“Costs have risen sharply and continue to go up while prices have fallen as new supply comes into the market,” she said.
In the three months to December, the price of nickel sold by BHP fell 17 per cent to $US16,812 a tonne, and BHP is now cutting costs and considering writing down the value of the business that employs 2500 workers at three mines, ore concentrators at Kambalda and Kalgoorlie and a refinery south of Perth.
Last week, BHP said it would announce its plans for its WA nickel business in February.
Already in January, Canadian miner First Quantum Minerals said it would stop mining at its Ravensthorpe nickel mine in WA’s south and switch to processing stockpiles, resulting in a 30 per cent cut to its 420-strong workforce. Smaller prospector Panoramic Resources’ Savannah nickel project in WA’s Kimberley was suspended by its administrators with 140 jobs lost.
Wyloo believes nickel from its mines should attract a price premium for their relatively smaller environmental footprint.
Giacovazzi said the London Metal Exchange was “awash with pollutive nickel which is squeezing out clean nickel from Australian producers”.
“We need to see structural change in nickel pricing that distinguishes between nickel products as well as their ESG credentials,” he said.
The closures, although temporary, are a big setback to Forrest’s plunge into the nickel sector.
As well as his takeover of ASX-listed Mincor Resources in 2023 to secure the WA mines, the iron ore billionaire won a high-profile bidding war with BHP in 2021 to seize ownership of Canadian nickel play Noront Resources for about $675 million.
The price dive in 2023 was in part caused by an estimated 16 per cent uptick in mining from the world’s leading producer Indonesia that is the target of Wyloo’s attack over environmental credentials.
Australia exported $5 billion of nickel in the 2023 financial year.
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