BHP stops nickel production in Western Australia

MELBOURNE (Reuters) – Australia’s BHP Group will temporarily suspend operations in Nickel West and its West Musgrave project from October, the mining group said on Thursday. The company is suffering from a collapse in metal prices and an oversupply on the global market.

The world’s largest listed mining company intends to review its decision to temporarily suspend its nickel operations in Western Australia by February 2027.

“We have not been able to meet the significant economic challenges created by a global oversupply of nickel,” said Geraldine Slattery, president of BHP in Australia.

After a transition period, BHP will invest around $300 million each year to support a possible restart of the nickel business.

Nickel prices have recovered from their three-year low of under $16,000 at the beginning of the year, but are still more than a quarter below last year’s levels.

Indonesia’s rise as a supply power and its move away from using nickel in batteries have put pressure on global nickel producers, both of which contributed to a 40% drop in the metal’s price to around $16,800 a tonne last year.

Australia is trying to build a manufacturing industry to increase the value of mineral commodities such as copper, nickel and rare earths, which are critical to the transition away from fossil fuels and include involvement in the production of battery chemicals.

However, producers face structural problems such as low prices and high construction and labor costs.

Australian battery metals producer IGO also announced on Thursday that it had paused a study to develop a plant to produce precursor materials for battery chemicals in light of low nickel prices.

BHP will release its quarterly production report next Wednesday.

(Reporting by Melanie Burton in Melbourne and Rishav Chatterjee in Bengaluru; Editing by Subhranshu Sahu and Keith Weir)