By Simon Johanson and Peter Milne
BHP has won no friends in Canberra with its announcement on Thursday it would close its 3000 worker-strong WA nickel mining and processing business for at least three years as surging volumes of cheaper product from Indonesia drives prices down.
Prime Minister Anthony Albanese criticised the mining giant’s decision as “very disappointing” when speaking to the media in Brisbane on Friday.
Western Australian BHP Nickel Asset President Jessica Farrell during a press conference on Thursday.Credit: Ross Swanborough
“I do note that they’ve said that frontline workers will be redeployed, and we’ll be holding them to account there,” he said.
The Prime Minister said his government had been working with BHP on its troubled nickel business for some time.
“We have a policy in place on critical minerals that will provide access to capital and financing because we regard critical minerals as not just being a part of our economic policy, but it’s important for our national security as well.”
BHP announced on Thursday it would shut down its Nickel West operations in Western Australia this October after a global crash in nickel prices.
The $221 billion ASX-listed miner said it would temporarily suspend mining and processing at the Kwinana nickel refinery, Kalgoorlie nickel smelter, Mt Keith and Leinster operations and its development of West Musgrave.
Massive write-down … BHP’s Nickel West mine in Western Australia.Credit: AFR
Thousands of employees and contractors are expected to be affected as the miner moves to transition its Nickel West and West Musgrave project operations into care and maintenance as early as this month.
“The transition period will commence from July 2024. Operations will be suspended in October 2024, and handover activities for temporary suspension will be completed by December 2024,” BHP said.
BHP said it intended to review the temporary closure by February 2027.
The miner said it would offer Western Australia Nickel frontline employees another role within BHP or the choice of taking a redundancy. It will also establish a $20 million community fund to support local communities during the temporary suspension.
The mining giant wrote down the value of its loss-making nickel operations by $3.8 billion this year. At the time, chief executive Mike Henry said the company was reviewing the operation and could potentially shutter them.
“The decision to temporarily suspend Western Australia Nickel follows oversupply in the global nickel market. Forward consensus nickel prices over the next half of the decade have fallen sharply reflecting strong growth of alternative low-cost nickel supply,” the company said in a statement to the ASX on Thursday.
BHP’s review followed a surge in nickel supply out of Indonesia last year that slashed global prices and shuttered Australia’s nickel sector seemingly overnight. The glut prompted the closure of a handful of Australian mines and crisis talks between the Albanese government and the nickel industry about production tax credits to support the sector.
“We understand this is a challenging period for the Western Australia Nickel team and surrounding communities,” BHP’s Australia president Geraldine Slattery said.
“Every frontline employee will be offered another role within BHP, and best endeavours will also be made to identify redeployment opportunities for other employees engaged in day-to-day operations of Western Australia Nickel.”
“That’s a job guarantee for around 1600 people,” Slattery told reporters on a media call.
West Australia’s Cook Labor government said it was committed to supporting affected workers and communities and would continue to drive diversification of the local resources sector following BHP’s “disappointing decision.”
Federal resources minister Madeleine King said it was a “hard day for workers” and BHP’s decision reflected the extreme volatility in global nickel markets.
Global nickel prices plunged from $US25,000 a tonne at the start of 2022 to around $US16,725 a tonne now. “This has put substantial pressure on BHP’s Nickel West operations,” King said.
She said the Albanese government had worked with BHP and other nickel operators to support Australian nickel production by adding nickel to the critical minerals list in February and making nickel projects eligible for critical minerals support under a $4 billion fund.
BHP’s share price closed up 0.9 per cent at $43.56 before Thursday’s announcement.
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