BHP to Temporarily Suspend Nickel Operations in Australia

BHP, a leading Australian resources firm, announced today its decision to temporarily suspend operations at its Western Australia nickel businesses starting October, with a review planned for February 2027. This suspension affects the Kwinana nickel refinery, Kalgoorlie nickel smelter, and the Mt Keith and Leinster mines. Additionally, the development of the West Musgrave project will be paused. A care and maintenance program will be implemented to ensure the mines' and infrastructure's safety and integrity during this period.

The decision comes amid an oversupply in the global nickel market, which has led to significant price drops. Benchmark prices for class 1 nickel on the London Metal Exchange have plummeted by approximately 20% over the past year, reaching $16,737 per ton on July 10, down from over $20,000 per ton in early July 2023.

"Like others in the Australian nickel sector, we have not been able to overcome the substantial economic challenges driven by a global oversupply of nickel," stated BHP President Geraldine Slattery.

This suspension raises concerns about the impact on the company's workforce and local communities. In response, BHP has committed to a A$20 million ($13.5 million) community fund to support local communities. The company will offer its frontline workers alternative roles within BHP or redundancy options. The Western Australia Labour government has introduced measures to assist affected workers, including training, upskilling, and job matching.

Following the transition period, BHP plans to invest around $300 million annually to support a potential restart of the facilities. This investment will focus on exploration to extend the resource life and preserve operational flexibility. The transition will begin in July, with operations ceasing in October and halting completely by December.

In February, BHP announced a review of its nickel operations and reported a non-cash impairment charge of $3.5 billion pre-tax on its Western Australia nickel business. With the temporary suspension, an additional $300 million pre-tax non-cash impairment charge will be sustained.