Western Australia Nickel to temporarily suspend operations
BHP announces that the Nickel West operations and West Musgrave project (Western Australia Nickel) will be temporarily suspended from October 2024. BHP intends to review the decision to temporarily suspend Western Australia Nickel by February 2027.
The decision to temporarily suspend Western Australia Nickel follows oversupply in the global nickel market. Forward consensus nickel prices over the next half of the decade have fallen sharply reflecting strong growth of alternative low-cost nickel supply.
During the temporary suspension, BHP will continue to support its workforce and local communities.
BHP will invest approximately US$300 million (AU$450 million) per annum following completion of a transition period to support a potential re-start of Western Australia Nickel.
The transition period will commence from July 2024. Operations will be suspended in October 2024 and handover activities for temporary suspension will be completed by December 2024.
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;
- implement a care and maintenance program of work to ensure the ongoing safety and integrity of its mines and related infrastructure;
- 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 AU$20 million Community Fund to support local communities during the temporary suspension.
Since FY2020 BHP has invested approximately US$3 billion (AU$4.4 billion) 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 US$300 million in the financial year to 30 June 2024.1
In February 2024, BHP announced plans to review Western Australia Nickel and a non-cash impairment charge of approximately US$3.5 billion (AU$5.1 billion) pre-tax against the carrying value of Western Australia Nickel. As a result of the decision to temporarily suspend operations, BHP expects to recognise a further non-cash impairment charge of US$0.3 billion (AU$0.45 billion) pre-tax as an exceptional item in the Group’s FY2024 Financial Statements.
