In quick:
BHP says 1,600 frontline staff will likely be redeployed or supplied redundancies as it shuts its WA nickel mines
The resolution may even influence 1000’s of contractors and different assist companies, as properly as a number of WA cities
What’s subsequent?
The mines will shut from October and the choice will likely be reviewed in February 2027
Mining large BHP has introduced it is placing its WA nickel mines on ice for not less than three years, blaming an “oversupply in the global nickel market.”
In a press release on Thursday afternoon, BHP mentioned it will start suspending its operations on the Kwinana nickel refinery in Perth, the Kalgoorlie smelter and its main mines at Mt Keith and Leinster from October.
It mentioned the choice will likely be reviewed in February 2027 and it’s going to proceed to speculate about $450 million a yr to assist a possible restart.
In a press release, WA Premier Roger Cook mentioned the transfer would have an effect on 1000’s of staff.
“My government will do whatever it takes to support those workers and our regional communities through this difficult time,” he mentioned.
The affected mines embrace BHP’s Nickel West operations and West Musgraves challenge within the Goldfields.
The miner mentioned projections point out nickel costs over the following 5 years would fall sharply, giving strategy to the robust progress of cheaper nickel produced elsewhere.
Redundancies and redeployments
BHP’s WA nickel asset president Jessica Farrell fronted a press convention on Thursday night and mentioned 1,600 frontline staff throughout the operations could be straight impacted.
“Anyone in our frontline that wants a job with BHP has a job with BHP,” she mentioned, though no element was given on these proposed redeployments.
“We’re continuing to work with all of our other employees and support businesses on options where we can for redeployment.”
Ms Farrell mentioned any of these frontline staff who selected to take a redundancy could be given one.
She mentioned the choice was “difficult but necessary”.
“We’ve obviously made this decision on the basis that we see an oversupply in the nickel market,” Ms Farrell mentioned.
“We see that oversupply persisting into the latter part of this decade, but obviously will review our decision in 2027.
BHP mentioned it will set up a $20 million neighborhood fund to assist the cities affected by the closures, although it was unclear what that cash could be spent on at this stage.
The resolution was not surprising, with the miner asserting its intention to mothball its nickel operations earlier this year.
Mines and Petroleum Minister David Michael said the move demonstrated the volatile nature of the market.
“This is a reminder that the mining trade is topic to cyclical commodity worth fluctuations and different market forces past its management,” he mentioned.
“I’m hopeful that many staff will stay with BHP given its dedication to redeploy all front-line staff.”
‘Economic fallout’
The economic pain of the closures will be most acute in WA’s Goldfields where BHP runs its Kalgoorlie nickel smelter, and Mt Keith and Leinster operations.
City of Kalgoorlie-Boulder Mayor Glenn Wilson said the economic consequences would be significant for the region.
“It’s going to be fascinating to see the financial fallout, as a result of we have a lot of our service trade that assist BHP from Kalgoorlie-Boulder, all of these will likely be affected by this suspension.”
The mothballing of the smelter facility alone would impact 300 local jobs in Kalgoorlie.
Mr Wilson said BHP’s assurances of redundancies or redeployments within the company and the $20 million support package for affected communities was not enough.
“If you are taking these 300 residential positions out of Kalgoorlie-Boulder in the intervening time, it is going to be far higher than what $20 million can provide, we might be encouraging BHP to take a look at that quantity and enhance it,” he mentioned.
BHP flagged its Nickel West operations were under review earlier this year, and warned of a potential suspension due to an unfavourable market.
Even so, Mr Wilson said the community had been caught off guard by the pace of the shutdown, with a transition period effective immediately.
“I believe the neighborhood are somewhat bit blindsided,” he mentioned.
“We had most likely as minimal data as what we might have, and we’d’ve most popular extra.”
Though the economic situation in Kalgoorlie and the broader Goldfields remains buoyant thanks to the strong gold prices.
“Gold is thank goodness doing fairly properly for our area, contact wooden that continues, however on the identical time we’ll have to take a look at diversification in our economic system rapidly as properly.”
Mr Wilson mentioned neighborhood members would meet with BHP on Monday to debate the transition and ongoing financial impacts of the non permanent suspension.
Australian producers lose aggressive edge
The global nickel market has undergone a seismic shift in the last 18 months.
Rising Indonesian market dominance has seen prices for the commodity plunging from about $US30,000 a tonne to $US16,000 a tonne, making BHP’s nickel arm unprofitable.
Independent mining analyst Peter Strachan mentioned Indonesia went from traditionally supplying six per cent of the world’s nickel to 53 per cent presently.
“This is just not a cyclical change within the nickel trade, it is a systemic concern,” he said.
New processing technology, yielded in partnership with Chinese steelmakers, has enabled Indonesia and the Philippines to supply nickel at a 30 per cent discount to Australia’s supply, Mr Strachan said.
Australia’s nickel producers, including Nickel West, have lost their competitive edge.
Mr Strachan said the shutdown of Nickel West would send shock waves through WA’s mining industry and the communities it employed.
“There’s going to be ramifications for all of the people in that ecosystem,” he mentioned.
“I’d say downward strain on home costs in Kalgoorlie-Boulder and Kwinana to begin off with, and numerous people in West Perth trying for jobs in direction of the tip of the yr.”
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