BHP announced on Thursday that it is considering closing its Western Australia Nickel operations amid a sharp fall in prices.
The miner said it could place Nickel West into care and maintenance and that it was assessing the phasing and capital spend for the development of the West Musgrave project, acquired as part of the OZ Minerals acquisition last year. The project held a value of $1.2 billion at the time of acquisition.
Nickel prices fell 40% in the last year as Indonesian supply jumped, causing restructures and writedowns at nickel mines across Australia.
“This is an uncertain time for the Western Australia nickel industry and we are taking action to address the current market conditions,” BHP CEO Mike Henry, said.
“We are reducing operating costs at Western Australia Nickel and reviewing our capital plans for Nickel West and West Musgrave,”
BHP has indicated a noncash impairment charge of approximately $2.5 billion against the carrying value of Western Australia Nickel, encompassing both the Nickel West operations and the West Musgrave project.
This impairment results in the reduction of Western Australia Nickel’s net operating assets carrying value to a negative $0.3 billion, which includes closure and rehabilitation provisions totaling around $0.9 billion.
Nickel West’s Kambalda concentrator will be placed into care and maintenance in June 2024 following Wyloo’s decision to suspend its Cassini and Northern Operations mines from 31 May 2024.
The Cassini and Northern Operations mines provide the majority of ore feed into the Kambalda concentrator and it will be no longer viable for Nickel West to continue operating the milling circuit after those mines cease operating.
Shares of BHP fell 0.85% by 11:30 a.m. EDT. The miner has a market capitalization of $150 billion.
THIS ARTICLE WAS ORIGINALLY POSTED ON MINING.COM
