Indonesian Nickel Surge Leads to Closure of IGO’s Cosmos Mine in Western Australia

In a significant turn of events in the global nickel market, Australian battery minerals specialist IGO has announced the closure of its Cosmos nickel mine in Western Australia’s Goldfields region, a decision affecting approximately 400 jobs. This move highlights the growing impact of Indonesia’s booming nickel industry on Australian mining operations.

IGO Chief Executive Ivan Vella pointed out that the market was unprepared for the efficiency with which Indonesian nickel miners have been able to develop new mines and processing plants. Vella, who joined IGO from Rio Tinto in December, stated that the recent plunge in nickel prices has made it impractical to bring the new mine to full production.

This decision follows a comprehensive review of the Cosmos project, acquired in 2022 when IGO took over ASX-listed Western Areas for $1.3 billion. The review concluded that the mine’s life would be shorter than expected and that both operating and capital costs had increased. While IGO’s other nickel mines, Nova and Forrestania, remain operational, the Cosmos closure marks a challenging period for the Western Australian nickel sector.

This closure is part of a broader trend in the region, with several other mining companies, including Andrew Forrest’s Wyloo Metals, First Quantum Minerals, and Panoramic Resources, also shutting down operations or reducing processing capacity. The market eagerly anticipates BHP’s upcoming announcement regarding its plans for its significant nickel business in Western Australia.

IGO, having shifted its focus primarily to battery minerals like nickel and lithium, finds itself navigating a tough market for both commodities. The company holds significant stakes in lithium ventures, including a 49% share in a joint venture with China’s Tianqi Lithium in building a lithium refinery in Kwinana, and a 50% ownership of the Greenbushes lithium mine.

Despite facing engineering and design challenges in ramping up the Kwinana refinery to full production, Vella remains optimistic, citing the strong margins generated by their lithium operations. However, IGO’s joint venture recently decided to cut lithium production by about 20% in response to sluggish market demand and oversupply concerns.

In the face of these market challenges, mining executives, including IGO and Liontown Resources, engaged in crisis talks with federal Resources Minister Madeleine King last week. The focus of these discussions was the volatility in prices for critical minerals like lithium spodumene and nickel.

Liontown Resources, another key player in the battery minerals sector, has adjusted its growth strategy in response to the current market conditions, delaying expansion plans for its Kathleen Valley lithium mine.

These developments in the Australian critical minerals sector underscore the need for strategic adaptations in a rapidly evolving global market, particularly in light of the increasing competition from Indonesian nickel producers. The Australian mining industry, a key player in the global supply of critical minerals for the energy transition, is recalibrating its approach to remain competitive and sustainable in this dynamic environment.