3000 jobs at risk as BHP weighs closure of WA nickel operations
About 3000 jobs are at risk as the mining giant signals it is considering mothballing the entire West Australian nickel division due to a flood of cheap nickel from Indonesia.
BHP has signalled it is considering mothballing the entirety of its WA nickel division, putting about 3000 jobs at risk, with the company slashing the value of its Nickel West division in WA and flagging more than $US6.5bn worth of impairments in its half-year accounts.
The grim news comes on the back of a wave of mine closures in the WA nickel sector in the face of soaring exports of cheap nickel from Indonesia.
The tumbling price of the steel and battery making commodity has already sent Panoramic Resources under, forced Andrew Forrest’s Wyloo Metals to close the underground nickel operation bought through the takeover of Mincor Resources, and stopped construction of IGO’s Cosmos nickel operation.
The closure of Nickel West would be an effective death knell for the Australian nickel industry, given BHP operates the country’s only nickel smelter and also controls the only Australian refinery.
BHP said on Thursday it is reviewing its spending at Nickel West, “which includes the potential to place Nickel West into a period of care and maintenance”.
The company had already flagged plans to close the Kambalda nickel concentrator from the middle of the year, which relies on ore from Wyloo’s Cassini mine to continue operating.
BHP said it could also suspend construction of the West Musgrave nickel mine, acquired through its $9.6bn takeover of OZ Minerals.
The global mining giant says next week’s half-year accounts will include a $US3.5bn writedown on the value of Nickel West, or $US2.5bn after tax, on the back of the tumbling nickel price that has thrown a pall over the entire Australian industry.
BHP will effectively write down the value of Nickel West to nothing, with the long-running operations also having a $US900m closure and rehabilitation cost on its books.
Nickel West is now bleeding cash, with the unit expected to book a half-year loss of about $US200m, BHP said on Thursday.
The cost of rehabilitating Nickel West’s operations – particularly the Kalgoorlie smelter and Kwinana refinery – has long been seen as the major barrier to BHP exiting Nickel West, particularly at other periods of low nickel pricing.
But the phenomenal surge in output from Indonesia has thrown a dark shadow over all Australian nickel operations and, though Nickel West has been loss-making in the past, BHP’s comments on the potential closure signal a grim outlook for the commodity’s future in Australia.
BHP will also take a $US3.1bn charge relating to the Samarco Dam disaster.
BHP shares were down 1.7 per cent to $45.18 in a higher market on Thursday late morning.
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