About 140 jobs lost as Panoramic’s WA nickel mine closes

Falling nickel prices have been blamed for the decision to suspend mining at the company’s flagship nickel project.

Falling nickel prices have been blamed for the administrators’ decision to suspend mining at Panoramic Resources' Savannah mine.

Around 140 jobs will go as administrators cease mining at Panoramic Resources’ flagship Savannah nickel project in Western Australia, following a further fall in nickel prices.

The administrators from FTI Consulting had previously planned to keep Savannah running but will now suspend operations at the mine “over the coming days”.

The majority of about 140 Panoramic staff on site at the project will be stood down and made redundant – some immediately – the administrators told the ASX late on Monday night.

ASX-listed mining services major Perenti, through its subsidiary Barminco, also has 160 people on site, although those workers may be redeployed.

FTI Consulting senior managing partner Daniel Woodhouse said the administrators would continue to seek a sale or recapitalisation of Panoramic’s business.

“While it was our intention to continue to trade on the Savannah nickel project and preserve the employment of the operating team as we explored opportunities for a sale or recapitalisation of Panoramic’s business, after consultation with major creditors and key suppliers it is apparent that the prospect of achieving a near-term turnaround of operations and finances is low,” he said.

“Given the near-term funding requirement for continued operations, we have made the difficult decision to suspend operations while the sale/recapitalisation process progresses.”

Panoramic was placed in voluntary administration on December 14 after a month-long strategic review into options for the Savannah project that was triggered by falling nickel prices.

But the review failed to find a sale, recapitalisation or partnering option that would provide sufficient financial certainty to the company and its stakeholders, Panoramic said at the time.

The administrators said while operations had continued, including a shipment of about 10,000 tonnes of nickel concentrate on January 3, “nickel prices have continued to trend lower”.

Nickel prices plunged by 45 per cent on the London Metal Exchange in 2023, which was the battery metal’s largest decline since 2008.

Mr Woodhouse said the administrators, with assistance from Treadstone Resource Partners which conducted the strategic review, would continue a dual-track strategy to sell or recapitalise the Panoramic business.

“This process will continue regardless of the Savannah nickel project’s operating status and look to realise the full value of the defined ore bodies, extensive infrastructure, and exploration potential of the project,” he said.

The nickel price plunge, which came as Indonesia ramped up production and amid forecasts for global nickel production to again exceed demand in 2024, has caused headaches for other nickel producers.

Nickel and lithium group IGO last month said it was likely to record a further impairment against its Cosmos project in WA in the first half of the 2024 financial year.

IGO acquired the Cosmos project and Forrestania nickel operation, also in WA, through its $1.25bn takeover of Western Areas in 2022.

IGO already wiped off almost the entire value of the Western Areas assets in its 2023 financial year results, which included a $968m writedown.

The FTI Consulting administrators said Panoramic employees with unpaid accrued entitlements would be creditors under the voluntary administration, and may also be entitled to make a claim against the Commonwealth Fair Entitlements Guarantee scheme in the event of a shortfall in funds to meet their entitlements.

Perenti said it will be discussing possible redeployment options with its workers at Savannah over the coming days and weeks.

“The decision by the administrator to place the project into care and maintenance creates an opportunity for us to consider redeployment options across our portfolio of Australian and global operations,” Perenti said in a statement on Tuesday.

Panoramic restarted operations at Savannah in the East Kimberley region in 2021. The project has a 12-year mine life.

Originally published as About 140 jobs lost as Panoramic’s WA nickel mine closes