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BHP Group Ltd said on Thursday it will ‘temporarily suspend’ its nickel operations in Western Australia from October, as miner grapples with depressed prices due to a glut in the global market for the metal.
The Melbourne, Australia-based resource miner will suspend the Nickel West operations and West Musgrave project from October. The transition period for the suspension will begin this month, and handover activities for the suspension will be completed by December.
BHP said it intends to review the decision in February 2027. It 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, it said.
As a result of temporal suspension, BHP said it expects to recognise a further non-cash impairment charge of $300 million pre-tax as an exceptional item for 2024.
In February 2024, BHP announced plans to review Western Australia Nickel and, at that time, took a non-cash impairment charge of about $3.5 billion on a pretax basis against the carrying value of Western Australia Nickel.
BHP said any redundancy payments and other contractual costs triggered by the decision to place Western Australia Nickel into suspension would be recognised in the first half of 2025.
The diversified miner had said in January it was evaluating options for its nickel operations amid a ‘sharp fall’ in nickel prices. This stemmed from structural changes in the industry.
During the temporary suspension, BHP said on Thursday it will invest $300 million per annum following completion of a transition period to support a potential re-start of Western Australia Nickel.
Since 2020, BHP has invested around $3 billion to sustain Western Australia Nickel as an ongoing business and to reorient its production to the battery and electric vehicle market, it said.
Despite the ‘significant’ capital investments, lower global nickel prices have contributed to Western Australia Nickel expecting to report an underlying earnings before interest, taxes, depreciation and amortisation loss of approximately $300 million for the first half to June 30, BHP revealed.
Shares in BHP were up 0.6% at 2,289.69 pence on Thursday in London, and they were up 0.7% to R 530.02 in Johannesburg.
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