Nickel West operations and West Musgrave project development will be suspended from October until at least February 2027.  

BHP has confirmed months of speculation by placing its entire Western Australian Nickel operations on care & maintenance starting from October. The company will review the decision in early 2027. The company blamed the oversupply in the global nickel market and a fall in forward consensus nickel prices over the next half of the decade. BHP has pledged to supports its workforce and local communities, given that it employs approximately 3,300 workers. The company will now invest approximately A$450M (US$300M) per year following completion of a transition period to support the potential restart of the operation.   

BHP’s Nickel West operation comprises the Kwinana nickel refinery, Kalgoorlie nickel smelter and Mt Keith and Leinster mine operations in Western Australia. The development of the West Musgrave project will also be suspended. In total, BHP has invested US$3Bn in Western Australian Nickel including Australia’s only nickel sulphate production line, which began production in 2021 to supply the EV battery sector.   

In truth, the writing was already on the wall when, in January, BHP first stated it was mulling the closure of its entire Western Australian Nickel operation due to the challenging operating environment. At the same time, it announced it would be placing part of its Kambalda nickel concentrator on care & maintenance owing to a lack of ore supply. Wyloo, a key source of ore to BHP’s nickel operations, had announced it was halting mining at its Kambalda operations, also succumbing to low nickel prices.  

The closure marks a watershed moment in the recent struggles for Australia’s embattled nickel sector. High labour costs and competition from low-cost Indonesian production (through massive Chinese investment) have made Australian nickel operations comparatively un-economical.  

After lengthy discussions between Australian nickel industry players and Western Australian government officials earlier this year, nickel was added to the country’s critical minerals list. This provided the sector with access to financing under Australia’s A$4Bn (US$2.7Bn) Critical Minerals Facility, and a 50% royalty rebate over an 18-month period with prices below US$20,000/t. Ultimately, this support only represented temporary relief to a sector that requires much larger scale restructuring in the face of increasing competition from lower-cost Indonesian production. 

On the same day as the BHP announcement, fellow Australian nickel producers IGO and Wyloo announced that they have paused plans for a A$1Bn (US$0.68M) battery chemicals processing plant which was to be developed in the Kwinana industrial strip.