Mining giant runs the gauntlet of ALP wrath in trying to cut its losses on so-called critical mineral

BHP is marketing its mothballed nickel business but might have to pay a hefty price to anyone willing to take on the associated $1.4bn closure and rehabilitation liabilities. It also faces heavy government scrutiny of any deal.

BHP Nickel West Kalgoorlie Smelter

BHP is committed to spending $450m a year preparing its mothballed nickel assets in Western Australia for a possible restart, while it risks its political capital by quietly putting the business up for sale.

The mining giant has issued a pitch and mandatory nondisclosure requirements to access a data room as part of efforts to move on from its nickel era, offering the WA mines, a smelter and refinery, and the West Musgrave project acquired as part of the $9.6bn Oz Minerals takeover to possible new ownership.

The smelter closure after 51 years of operation was a harbinger of more pain in Australia’s metals processing industry. Swiss rival Glencore is now locked in talks about the future of its ageing copper assets in Queensland, and Rio Tinto is seeking a bailout for its Tomago aluminium refinery in NSW.

Glencore has extended the deadline to make a call on whether to shut down its loss-making copper smelter at Mount Isa and refinery at Townsville until mid-September, amid negotiations with the federal government, while Rio may be even closer to securing a rescue package.

The nickel sale memorandum indicates BHP would prefer to sell the business, formerly known as Nickel West, as a whole, but will consider partial divestments too.

Federal resources minister Madeleine King declined to comment on Sunday.

Ms King and BHP exchanged barbs over the future of nickel business before BHP announced what it called a temporary suspension of operations in July last year. Both Ms King and WA Labor premier Roger Cook labelled the move disappointing for a state where BHP makes huge profits from extracting iron ore.

BHP Nickel West Kalgoorlie Smelter

BHP said at the time it would invest about $US300m ($466.7m) a year to support a potential restart, pending a review of the suspension by February 2027.

It is unclear how much of that commitment was met in the year to June 30, and BHP declined go into detail while maintaining it intended to honour the commitment.

The nickel assets carry closure and rehabilitation liabilities of at least $US900m.

BHP last actively marketed the business about a decade ago, when it was speculated Glencore offered to take control for a nil premium.

Industry sources say any interest from Glencore today would likely require BHP to pay out as much as $US300m to wash its hands of the business. A Glencore spokeswoman said: “We don’t comment on rumour and speculation.”

Glencore operates the Murrin Murrin nickel laterite mine in WA’s Goldfields, home to BHP’s nickel sulphide mines and smelter. Murrin Murrin slipped into loss making territory in the first half of 2025 but – based on strong backing from Glencore chief executive Gary Nagle – is poised to become the last nickel mine standing in Australia as IGO’s Nova runs out of steam.

Nickel witnessed thousands of job losses blamed on a global oversupply stemmed from China-backed production in Indonesia.

BHP’s 2024-25 results show it ploughed $US200m in capital expenditure into the WA nickel business. WA nickel recorded an underlying EBITDA loss of $US600m, including the care and maintenance program under way.

BHP also wrote down the value of the assets by $US3.5bn in February 2024 at a time when the operations were losing more than $US33m a month.

Quizzed about the future of WA nickel last week, BHP chief executive Mike Henry denied a sale with the company’s preference. “I wouldn’t say it’s a preferred outcome at all, but as we embark upon our review of where to from here for the assets … it is one of the potential paths forward that we need to have in scope,” he said.

“And so we felt it best to you know, before we consider that further, before there’s any engagements around it … to be clear and transparent, as we’ve been all along the way with the Nickel West process,” he said.

“All of that’s happening in parallel with our commitment to review the (temporary suspension) decision and the best path forward, whether those assets are going to generate best value under BHP ownership or under the ownership of somebody else.”

The Albanese government added nickel, used in energy storage and electric vehicle batteries, to its critical minerals list in February 2024 amid the spate of mine closures. That meant BHP’s smelter and refinery would qualify for the government’s 10 per cent production tax credits due to kick in mid-2027.

Its smelter at Kalgoorlie operated for 51 years before being mothballed last October.

In May last year, Ms King accused BHP of under-investing in infrastructure like the smelter to the potential detriment of thousands of workers.

She also took a swipe at Mr Henry for raising the government’s industrial relations policy, which he suggested he would prefer to be softened over government subsidies.

“Australia has become a high-cost place to build things, and in terms of the operating costs, energy is one of the key inputs for smelting,” Mr Henry said last week. “Electricity costs in Australia are two or more times higher than they are in Canada, Indonesia and other countries, and 50 per cent higher than they are, at least, than the US. So that makes it more expensive.”