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BHP issues dire warning on nickel mines
Brad Thompson and Peter Ker
Dec 15, 2023 – 10.00pm
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The overhaul of the Albanese government’s critical minerals strategy offers no relief to the besieged nickel industry, which faces further job losses at BHP-owned mines.
BHP said its Nickel West business was not immune to the challenges suffocating the sector where some mines have shut down, and fellow producer Panoramic Resources was tipped into administration this week.
Nickel West asset president Jessica Farrell said uncertainty had swept through the Australian nickel industry.
BHP Nickel West asset president Jessica Farrell is worried about the sector. Trevor Collens
“We are working hard to remain globally competitive in a very tough operating environment. Costs have risen sharply and continue to go up while prices have fallen as new supply comes into the market,” she said.
Industry sources estimate Nickel West has been losing tens of millions of dollars a month. Andrew Forrest, meanwhile, is battling to keep open the Mincor nickel mines his Wyloo Metals business acquired for $760 million in July.
Nickel West employs more than 2500 people across underground mining operations, and a nickel smelter and refinery in WA, and counts Mincor as one of its suppliers.
Ms Farrell described a “fast-evolving global market” where hundreds of local jobs have already been lost across competing producers.
“We know this is creating a lot of uncertainty for the many people who work in Australia’s nickel industry, and we continue to communicate with our people and across the sector as we take action to address these challenges.”
The government has made five additions to its critical minerals list and created a B-list for “strategic materials” that includes nickel and copper.
Nickel producers have lobbied hard for inclusion on the critical list amid a price slump driven by a flood of global supply from Chinese-backed operators in Indonesia. Nickel is classified as a critical mineral by key allies the United States and Japan.
The government added fluorine, molybdenum, arsenic, selenium and tellurium to its list, enabling access to $4 billion in taxpayer funding for the relevant producers. The commodities are all used in the defence and technology sectors.
The newly defined strategic materials list – ineligible for the $4 billion funding pool – covers nickel, copper, aluminium, phosphorus, tin and zinc.
Resources Minister Madeleine King said these were well-established industries with greater global market depth, clearer price transparency and stable supply chains.
Australian nickel miners have been hit hard by a slide in the nickel price this year, which is down about 50 per cent on the LME from around $US32,000 a tonne, and analysts have warned there is no end in sight to oversupply coming from Indonesia.
Ms King took a swipe at Indonesia and its long-standing ban on the export of unrefined nickel when asked about the crisis hitting Australian producers.
She indicated the bans had distorted the market, with China subsequently investing tens of billions of dollars in refining assets in the South-East Asian nation.
“I’m conscious of the impact that export bans are having on global battery minerals markets,” she said. “Australia is a great trading nation, and our economic prosperity has grown enormously from an open and rules-based trading environment.”
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