Yahoo Finance Thousands of BHP jobs in limbo as mining giant announces shock shutdown: 'Difficult'
BHP said it has been battling a 'global oversupply' of nickel and is winding down its operations in WA until at least 2027.
BHP has shocked the mining world after announcing a sudden shutdown of its nickel operations in Western Australia until at least 2027. The company employs roughly 2,500 to 3,000 people in that sector and many of those workers could soon be without a job.
BHP President Australia Geraldine Slattery said they were battling against "substantial economic challenges driven by a global oversupply of nickel", which has seen the price of the vital mineral drop from US$22,000 (AUD$32,540) a tonne in 2022 to just US$16,725 (AUD$24,739) a tonne.
Nickel has a lot of uses in everyday items like coins, armour plating and turbine blades, but one of its biggest applications is electric and hybrid car batteries.
RELATED
Australia's China cash cow doomed as 'Pilbara killer' fires up
Rare 50 cent coin warning as Aussies offered $10,000 pay day
BHP has been particularly struggling to compete against nickel harvested in and sold from Indonesia and China, with experts saying cheap, low-grade nickel pig iron has contributed to the price of the mineral dropping.
The Australian multinational mining and metals company's nickel division is expecting to report a loss of $450 million last financial year.
To stem the bleeding from the industrial bloodbath, it has decided to close its Kwinana nickel refinery, Kalgoorlie nickel smelter and Mt Keith and Leinster operations from October.
The West Musgrave project will also be suspended.
Are you affected by this shutdown? Email stew.perrie@yahooinc.com
What will happen to the thousands of BHP workers?
BHP has announced it will try to redeploy "frontline" workers affected by the nickel shutdown.
“Every frontline employee will be offered another role within BHP and best endeavours will also be made to identify redeployment opportunities for other employees engaged in the day-to-day operations of Western Australia Nickel,” the company said.
Those who aren't offered another role at BHP could be given a redundancy payout.
Yahoo Finance understands there will be a small contingent of about 400 workers who will remain employed in the nickel division and BHP will spend $450 million a year to keep operations as ready-to-go as possible in case problems affecting the industry swing in its favour.
The company has also announced a $20 million package to help the communities affected by the sudden shutdown.
“We looked at the numbers and looked at our vacancies – and it is well recognised that the labour market is very tight in Western Australia and in Australia more broadly,” Slattery said.
“We value our people, and we value their capabilities and training. We’ve looked at what it will take across Western Australian iron ore, or potentially South Australia copper and other assets and so that’s essentially how we’ve come up with the numbers – based on our evaluation of our workforce.”
How long will the BHP nickel shutdown last?
BHP said it would review the shutdown decision in 2027 but it's expected to take several months from October this year for all nickel operations to wind down.
BHP's WA nickel asset president Jessica Farrell expects the fierce global competition for the vital mineral will last for several years.
"We've obviously made this decision on the basis that we see an oversupply in the nickel market," she said. "We see that oversupply persisting into the latter part of this decade, but obviously will review our decision in 2027.
WA Premier Roger Cook said his government will do "whatever it takes" to support the workers and communities affected by the "difficult" shutdown.
Resources Minister Madeleine King said the Albanese government has been working hard to ensure the industry can survive.
“[We] worked with BHP and the broader nickel sector on policy responses that would support ongoing Australian nickel production,” she said. “We added nickel to the critical minerals list in February, making nickel projects eligible for consideration under the $4bn critical minerals facility.
“We also announced the critical minerals production tax incentive in the May Budget.
“However, it is clear that the scale of commercial difficulties Nickel West faces due to developments in global nickel markets has led to the temporary suspension announced by BHP.”
Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.
