BHP Australia, one of the leading nickel producers in the country, has announced the suspension of its nickel operations in Western Australia due to the ongoing economic challenges in the industry. The decision will impact 2,500 employees in the division, who will be offered redeployment opportunities or a redundancy payout.
The company cited the global oversupply of nickel as a major factor contributing to its decision. BHP president Geraldine Slattery expressed the company’s struggle to compete with the current market conditions, which have resulted in a significant decline in nickel prices. This has also led to a substantial impairment charge against the carrying value of the business.
In response to the suspension, BHP will establish a A$20 million community fund to support the local communities and businesses affected by the closure. Resources Minister Madeleine King called the decision disappointing, highlighting the government’s efforts to support Australian nickel production through policy responses and initiatives such as adding nickel to the critical minerals list.
The nickel industry, a crucial component for electric vehicle batteries, has been facing challenges globally. With prices dropping by 40% last year and continuing to decline, experts believe the market has reached a critical point. Top producer Indonesia’s growing supply of nickel has contributed to the oversupply, making it difficult for Australian producers to compete.
In light of these challenges, other nickel producers like Anglo American and Glencore have also taken steps to address the market conditions, with some exploring divestment or closure of operations. The shift in the nickel market landscape is reshaping global supply chains and pricing dynamics, with Australian producers experiencing a significant drop in their share of nickel in the London Metal Exchange’s warehousing network.
As the industry navigates these challenges, stakeholders are looking towards sustainable solutions and strategies to ensure the long-term viability of nickel production.
