BHP is looking at nickel division
3000 jobs at risk in west
BHP has signalled it is considering mothballing its West Australian nickel division in a move that would put about 3000 jobs at risk.
The miner slashed the value of its Nickel West division and flagged more than $US6.5bn ($10bn) worth of impairments in its half-year accounts.
The grim news comes amid a wave of mine closures in the WA nickel sector in the face of soaring exports of cheap nickel from Indonesia.
The tumbling price of the commodity, which is used to make steel and batteries, has already sent Panoramic Resources under, forced Andrew Forrest’s Wyloo Metals to close an underground nickel operation bought through the takeover of Mincor Resources, and stopped construction of IGO’s Cosmos nickel operation.
The closure of Nickel West would be an effective death knell for the Australian nickel industry, given BHP operates the country’s only nickel smelter and also controls the only Australian refinery.
On Thursday BHP said it was reviewing its spending at Nickel West, “which includes the potential to place Nickel West into a period of care and maintenance”.
The company had already flagged plans to close the Kambalda nickel concentrator from the middle of the year, which relies on ore from Wyloo’s Cassini mine to continue operating.
BHP said it could also suspend construction of the West Musgrave nickel mine, which was acquired through its $9.6bn takeover of OZ Minerals.
The global mining giant says next week’s half-year accounts will include a $US3.5bn writedown on the value of Nickel West, or $US2.5bn after tax, on the back of the tumbling nickel price that has thrown a pall over the entire Australian industry.
BHP will effectively write down the value of the Nickel West operation to nothing, with the long-running unit also attracting a $US900m closure and rehabilitation cost on its books.
Nickel West was now bleeding cash, with the unit expected to book a half-year loss of about $US200m, BHP said on Thursday.
The cost of rehabilitating Nickel West’s operations – particularly the Kalgoorlie smelter and Kwinana refinery – has long been seen as the most significant barrier to BHP exiting Nickel West, particularly at other periods of low nickel pricing.
But the phenomenal surge in output from Indonesia has thrown a dark shadow over all Australian nickel operations and, though Nickel West has lost money in the past, BHP’s comments on the potential closure signal a grim outlook for the commodity’s future in Australia.
BHP will also take a $US3.1bn charge relating to the Samarco disaster in Brazil in 2015 that killed 19 people when a tailings dam failed.
BHP shares were down 1.7 per cent to $45.18 in a higher market late on Thursday morning.