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In short:
BHP says 1,600 frontline workers will be redeployed or offered redundancies as it shuts its WA nickel mines
The decision will also impact thousands of contractors and other support businesses, as well as several WA towns
What’s next?
The mines will close from October and the decision will be reviewed in February 2027
Mining giant BHP has announced it's putting its WA nickel mines on ice for at least three years, blaming an "oversupply in the global nickel market."
In a statement on Thursday afternoon, BHP said it would begin suspending its operations at the Kwinana nickel refinery in Perth, the Kalgoorlie smelter and its major mines at Mt Keith and Leinster from October.
It said the decision will be reviewed in February 2027 and it will continue to invest about $450 million a year to support a potential restart.
In a statement, WA Premier Roger Cook said the move would affect thousands of workers.
"My government will do whatever it takes to support those workers and our regional communities through this difficult time," he said.
The affected mines include BHP's Nickel West operations and West Musgraves project in the Goldfields.
The miner said projections indicate nickel prices over the next five years would fall sharply, giving way to the strong growth of cheaper nickel produced elsewhere.
Redundancies and redeployments
BHP's WA nickel asset president Jessica Farrell fronted a press conference on Thursday evening and said 1,600 frontline workers across the operations would be directly impacted.
"Anyone in our frontline that wants a job with BHP has a job with BHP," she said, although no detail was given on those proposed redeployments.
"We're continuing to work with all of our other employees and support businesses on options where we can for redeployment."
Ms Farrell said any of those frontline workers who chose to take a redundancy would be given one.
She said the decision was "difficult but necessary".
"We've obviously made this decision on the basis that we see an oversupply in the nickel market," Ms Farrell said.
"We see that oversupply persisting into the latter part of this decade, but obviously will review our decision in 2027.
BHP said it would establish a $20 million community fund to support the towns affected by the closures, though it was unclear what that money would be spent on at this stage.
The decision was not unexpected, with the miner announcing its intention to mothball its nickel operations earlier this year.
Mines and Petroleum Minister David Michael said the move demonstrated the volatile nature of the market.
"This is a reminder that the mining industry is subject to cyclical commodity price fluctuations and other market forces beyond its control," he said.
"I am hopeful that many employees will remain with BHP given its commitment to redeploy all front-line workers."
'Economic fallout'
The economic pain of the closures will be most acute in WA's Goldfields where BHP runs its Kalgoorlie nickel smelter, and Mt Keith and Leinster operations.
City of Kalgoorlie-Boulder Mayor Glenn Wilson said the economic consequences would be significant for the region.
"It's going to be interesting to see the economic fallout, because we've got many of our service industry that support BHP from Kalgoorlie-Boulder, all of those will be affected by this suspension."
The mothballing of the smelter facility alone would impact 300 local jobs in Kalgoorlie.
Mr Wilson said BHP's assurances of redundancies or redeployments within the company and the $20 million support package for affected communities was not enough.
"If you're taking those 300 residential positions out of Kalgoorlie-Boulder at the moment, it's going to be far greater than what $20 million can supply, we'd be encouraging BHP to look at that number and increase it," he said.
BHP flagged its Nickel West operations were under review earlier this year, and warned of a potential suspension due to an unfavourable market.
Even so, Mr Wilson said the community had been caught off guard by the pace of the shutdown, with a transition period effective immediately.
"I think the community are a little bit blindsided," he said.
"We had probably as minimal information as what we could have, and we would've preferred more."
Though the economic situation in Kalgoorlie and the broader Goldfields remains buoyant thanks to the strong gold prices.
"Gold is thank goodness doing quite well for our region, touch wood that continues, but at the same time we're going to have to look at diversification in our economy quickly as well."
Mr Wilson said community members would meet with BHP on Monday to discuss the transition and ongoing economic impacts of the temporary suspension.
Australian producers lose competitive edge
The global nickel market has undergone a seismic shift in the last 18 months.
Rising Indonesian market dominance has seen prices for the commodity plunging from about $US30,000 a tonne to $US16,000 a tonne, making BHP's nickel arm unprofitable.
Independent mining analyst Peter Strachan said Indonesia went from historically supplying six per cent of the world's nickel to 53 per cent currently.
"This is not a cyclical change in the nickel industry, it's a systemic issue," he said.
New processing technology, yielded in partnership with Chinese steelmakers, has enabled Indonesia and the Philippines to supply nickel at a 30 per cent discount to Australia's supply, Mr Strachan said.
Australia's nickel producers, including Nickel West, have lost their competitive edge.
Mr Strachan said the shutdown of Nickel West would send shock waves through WA's mining industry and the communities it employed.
"There's going to be ramifications for all the people in that ecosystem," he said.
"I would say downward pressure on house prices in Kalgoorlie-Boulder and Kwinana to start off with, and a lot of people in West Perth looking for jobs towards the end of the year."
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