BHP’s relationship with its Western Australian nickel operations, known as Nickel West, has been marked by a series of ups and downs over the years. The division, which has long been a point of contention within the company, is now facing an uncertain future after BHP announced a “temporary suspension” of operations, a move that may extend far longer than initially anticipated.
In 2014, BHP made the decision to exclude Nickel West from its South32 spin-off, which was created to manage the company’s non-core assets. In hindsight, this exclusion might have been a blessing for South32, which has since grown to be worth $9.5 billion—50% more than its debut valuation.
Later that same year, BHP turned away potential buyers for Nickel West, reportedly including Glencore and the Chinese nickel group Jinchuan, despite offers that were said to be as high as $1 billion. Three years later, rather than shutting down the division, BHP opted to build a sulfate plant, aiming to transform Nickel West into a comprehensive “mine-to-market” operation.
However, this July, BHP admitted that its efforts to sustain and expand the division had not paid off as hoped. The company had invested $3 billion since 2020 in supporting Nickel West, which now includes assets such as the Kwinana nickel refinery, Kalgoorlie nickel smelter, Mt Keith and Leinster mines, and the West Musgrave project, acquired through last year’s $6.4 billion Oz Minerals takeover.
Despite the investment, BHP’s recent year-end results suggest that the suspension of Nickel West might be more permanent than temporary. While the long-term outlook for nickel remains positive, especially with the ongoing energy transition, BHP noted that the “demand signposts” from the stainless steel and electric vehicle markets have been negative since its review of the division was announced in February. Furthermore, the supply side has not responded as expected, with delays in mining approvals in Indonesia, disruptions in New Caledonia, and the LME’s suspension of Russian metal deliveries all contributing to the challenges.
Although nickel prices have recently recovered, climbing back to the $17,000 per tonne mark, the market remains in a bearish state, with prices down more than 20% from their highs just three months ago. The challenges facing Nickel West reflect broader issues in the nickel industry, which BHP believes may continue to experience annual surpluses into the latter part of the decade. 
