BHP says it is continuing to assess its nickel asset’s long-term viability amid low nickel prices.

BHP is undertaking an ongoing review which is exploring ways to optimise and enhance the nickel division’s efficiency. Such measures include optimising operations and maintenance schedules, reviewing capital plans, and reducing contractor spending and equipment hire. Significantly for the 3,300 employees working at the company’s nickel division, BHP is also considering the potential to transition Nickel West into a period of care and maintenance. The company says it expects to provide an update on the longer-term future of Western Australian Nickel by FY24 results in August.

Whilst providing the update, BHP also revealed that its production in the quarter ending March 2024 totalled 18.8kt, which was a decrease of 4.4% q-o-q. This is related to lower volumes due to planned maintenance at the Kwinana Refinery and severe weather in March.

Australia’s embattled nickel sector has suffered in response to low prices brought about by a wave of Indonesian nickel units entering the market over the past few years. BHP already announced earlier this year that it will suspend part of its Kambalda concentrator from June owing to a lack of ore supply brought about by Wyloo’s move to shutter its Kambalda nickel mines. Other producers including First Quantum, IGO and Panoramic Resources have either reduced production or suspended operations altogether.

In response, in February, Western Australia’s government pledged a nickel financial assistance program, offering to provide a 50% royalty rebate over an 18-month period with prices below US$20,000/t, which would be repayable over 24 months. It also added nickel to the country’s critical minerals list, providing access to financing under Australia’s A$4Bn (US$2.7Bn) Critical Minerals Facility. However, even with this support, with Indonesian nickel supply showing little sign of slowing over the course of the year, BHP may well decide that care and maintenance is the preferable solution for its investors over the near term.