MELBOURNE (Reuters) – Australia’s BHP Group will temporarily suspend its Nickel West operations and the West Musgrave project from October, the miner said on Thursday, as it recovers from a fall in metals prices and a surplus of offer 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 until February 2027.
“We have failed to overcome the substantial economic challenges driven by a global nickel oversupply,” said Geraldine Slattery, president of BHP Australia.
BHP will invest around US$300 million every year after a transition period to support a possible restart of the nickel business.
Nickel prices have recovered from three-year lows below $16,000 reached at the start of the year, but are still below year-ago levels by more than a quarter.
Global nickel producers have been pressured by Indonesia’s emergence as a supply power and the move away from the use of nickel in batteries, which contributed to a 40% drop in the metal’s price last year to about $16,800 per ton. metric.
Australia has been trying to develop a processing industry to add value to mineral resources such as copper, nickel and rare earths, which are key to the transition away from fossil fuels, including the move downstream to the production of battery chemicals.
But producers face structural problems, such as low prices and high construction and labor costs.
Australian battery metals producer IGO also said on Thursday it has paused a study to develop a plant to make precursor materials for battery chemicals amid 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)
