Follows oversupply in global nickel market (Il Sole 24 Ore Radiocor) - Sydney, 11 Jul - Australian miner BHP said that it would temporarily suspend its Western Australia Nickel operations comprising the Nickel West and West Musgrave project from October 2024 and that it plans to review the decision by February 2027.

The decision comes amid oversupply in the global nickel market with forward consensus nickel prices over the next half of the decade falling sharply reflecting strong growth of alternative low-cost nickel supply.

BHP will invest approximately 300 million US dollars per year following completion of a transition period to support a potential re-start of Western Australia Nickel.

During the temporary suspension, BHP will suspend mining and processing operations at the Kwinana nickel refinery, Kalgoorlie nickel smelter, and Mt Keith and Leinster operations and the development of the West Musgrave project.

It will also implement a care and maintenance program of work to ensure the ongoing safety and integrity of its mines and related infrastructure. It plans to continue to invest in exploration to extend the resource life of Western Australia Nickel and preserve optionality and offer Western Australia Nickel frontline employees another role within BHP or the choice of a redundancy and establish a 20 million Australian dollar Community Fund to support local communities during the temporary suspension.

Since FY2020 BHP has invested approximately 3 billion US dollars to sustain Western Australia Nickel as an ongoing business and to reorient its production to the battery and electric vehicle market. This includes establishing Australia's first nickel sulphate plant to enhance downstream infrastructure, building two new mines and investing in the development of two solar farms and battery storage. Western Australia Nickel has recorded negative cash flow every year during this period.

Despite the significant capital investments, lower global nickel prices have contributed to Western Australia Nickel expecting to report an underlying EBITDA loss of approximately 300 million US dollars in the financial year to June 30, 2024.

In February 2024, BHP announced plans to review Western Australia Nickel and a non-cash impairment charge of approximately 3.5 billion US dollars pre-tax against the carrying value of Western Australia Nickel. As a result of the decision to temporarily suspend operations, BHP expects to recognize a further non-cash impairment charge of 0.3 billion US dollars pre-tax as an exceptional item in the group's FY2024 financial statements.

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(RADIOCOR) 11-07-24 10:37:39 (0238) 5 NNNN