BHP’s Nickel Operations Shutdown Sends Shockwaves Through Australian Mining Industry
The impending closure of BHP’s nickel operations in Western Australia is set to create significant impacts across the sector, with some experts predicting it could signal the decline of the Australian nickel industry. BHP announced on Thursday that it would suspend operations at the Kwinana nickel refinery in Perth, the Kalgoorlie smelter, and its major mines at Mt Keith and Leinster from October, citing market conditions for the decision.
This move follows the closure of First Quantum Mineral's Ravensthorpe nickel operation earlier this year. BHP's suspension will affect 1,600 frontline workers, who will either be redeployed or offered redundancies, with hundreds more contractors also impacted.
Prominent Perth-based mining analyst Tim Treadgold expressed doubt about the industry's ability to recover from the exit of such a major player. "This is very close to being the death knell," he said, attributing the current price decline to an oversupply of cheaper Indonesian nickel, which has been less concerning to electric vehicle manufacturers who prioritize the metal itself over its source.
Nickel prices have plummeted from nearly $50,000 per tonne two years ago to $17,000 per tonne now, a drop that Treadgold noted as unusually volatile for any commodity.
Despite BHP’s indication that it may restart operations in 2027, Treadgold emphasized the substantial investment required to update the miner’s aging infrastructure. The shutdown is expected to severely affect small mining communities like Leinster and Kambalda, particularly the local businesses that support these mines.
BHP has pledged to establish a $20 million community fund to assist towns impacted by the closures, though Coolgardie Shire President Malcolm Cullen believes this amount is insufficient. Nonetheless, Cullen remains optimistic that ongoing activity in the gold, lithium, and exploration sectors will help mitigate the economic blow.
Local business leaders in Kalgoorlie are hopeful that affected workers will find new opportunities within the region. Ron Mosby, a local business figure, noted that there are always "well over a thousand" jobs available across the Goldfields, expressing hope that workers would stay within the community rather than seek redeployment elsewhere.
Federal Resources Minister Madeline King pointed out that the circumstances leading to BHP’s decision were beyond the control of both the government and the company, highlighting the rapid growth of the Indonesian nickel industry. King emphasized that while BHP’s decision to temporarily suspend operations rather than close them permanently was somewhat reassuring, the situation remains challenging.
Western Australia's Mines and Petroleum Minister David Michael echoed a cautiously optimistic outlook, stating that the medium to long-term prospects for nickel remain positive despite current price challenges.
