“Like others within the Australian nickel sector, we’ve got not been in a position to overcome the substantial financial challenges pushed by a world oversupply of nickel,” BHP’s Australia president Geraldine Slattery stated in an announcement.
BHP famous it will supply redeployment alternatives to the corporate’s different operations or a redundancy payout to the two,500 staff within the division.
The corporate will set up a A$20 million ($13.6m) fund to assist native communities and enterprise impacted by the suspension. It has additionally elevated its non-cash impairment by $300 million to the $3.5 billion impairment cost towards the carrying worth of the enterprise, which it introduced in February.
Sources Minister Madeleine King known as the choice “disappointing”, noting that the federal authorities had labored with BHP and the broader nickel sector on coverage responses to assist ongoing Australian nickel manufacturing.
“We added nickel to the important minerals listing in February, making nickel tasks eligible for consideration beneath the A$4 billion important minerals facility,” King stated in an announcement.
Onerous to compete
Costs for nickel, a vital steel for electrical car (EV) batteries, dropped 40% final yr and have continued to expertise declines previously weeks.
Consultants, together with Macquarie Monetary Providers, say costs have probably hit a flooring primarily as a result of rising quantity of the steel coming from prime producer Indonesia. This oversupply has pushed the business right into a important scenario, as half of all nickel mines are unable to show a revenue at present costs.
Larger prices at mines in Australia have made it laborious to compete with provide from Indonesia, which is extra polluting and carbon-intensive. It’s one of many components behind latest requires ESG-related pricing for metals.
Nickel producers worldwide are taking steps to scale back the influence of the present market challenges. Anglo American (LON: AAL) is exploring choices to both divest or shut down its nickel division, whereas Glencore (LON: GLEN) has determined to droop and promote a few of its operations within the islands of New Caledonia.
BHP and different Australian producers have lengthy been key suppliers of refined nickel, which influences costs on the LME. In January 2023, Australia accounted for 72% of the nickel within the change’s warehousing community, however by June this share had dropped to 29%.