Nickel miners sacked as WA mine halts operation
Administrators in charge of Panoramic Resources have called a halt to mining as the nickel price continues to weaken and pressure builds on mines owned by BHP and Andrew Forrest.
Mining will come to a halt at Panoramic’s Savannah mine in Western Australia in the next few days with about 140 jobs to go within the company. More than 200 workers employed by contractors also face the chop.
FTI Consulting had intended to keep the mine running when they were appointed as administrators in mid-December, but saidnickel prices continued to fall.
“After further engagement with major creditors, key suppliers and other stakeholders, the administrators have determined that operations at the Savannah nickel project will be suspended over the coming days,” investors were told late on Monday.
The decision to suspend mining means most Panoramic workers will be stood down and made redundant.
The company said workers with unpaid entitlements would become creditors under the terms of the voluntary administration and may also be entitled to make a claim against the Commonwealth Fair Entitlements Guarantee scheme if there is a shortfall in funds available to cover some of their entitlements.
Panoramic reopened the Savannah mine in the Kimberley region of WA in 2021 but struggled in 2023 when nickel prices halved, an important piece of machinery failed and bad weather severed an important transport route.
FTI is trying to sell or recapitalise the failed nickel miner against an increasingly grim outlook for the sector, and with no end in sight to Chinese-backed producers in Indonesia flooding the global nickel market.
The benchmark price for nickel measured by the London Metals Exchange has fallen to around $US16,600 a tonne after the metal was fetching just over $US30,000 a tonne in January 2023.
BHP Nickel West asset president Jessica Farrell toldThe Australian Financial Reviewlast month thatuncertainty had swept through the Australian nickel industry.
Ms Farrell said this was in turn creating certainty for workers in the Australian nickel industry. Nickel West employs more than 2500 people across its mining and downstream operations in WA.
Wyloo Metals, a private mining company owned by Andrew and Nicola Forrest, is also facing an uphill battle to keep open the Mincor nickel operations it acquired for $760 million last July.
Nickel and lithium producer IGO conceded in December that it may have to write off all of the $1.3 billion it paid for the Western Areas nickel assets in mid-2022. The admission came as IGO started shedding jobs at the troubled Cosmos nickel project in WA.
Advisory firm Treadstone Partners spent a month trying to save Panoramic through a sale or joint venture deal before it was put into administration.
Multinational commodity trader Trafigura has a contract to buy most of the nickel, copper and cobalt concentrate produced by Panoramic. Trafigura is believed to have security over Panoramic’s assets according to the details of an unresolved loan announced to the ASX in April 2021.
Panoramic made a shipment of about 10,000 tonnes of nickel
concentrate on January 3.
FTI Consulting’s Daniel Woodhouse said on Monday that the odds of a quick-fix emerging for Panoramic were low.
“While it was our intention to continue to trade-on the Savannah nickel project and preserve the employment of the operating team as we explored opportunities for a sale or recapitalisation of Panoramic’s business, after consultation with major creditors and key suppliers it is apparent that the prospect of achieving a near-term turnaround of operations and finances is low,” he said.
“Given the near-term funding requirement for continued operations, we have made the difficult decision to suspend operations while the sale/recapitalisation process progresses.”
(20min delay)
