In response to the oversupply of nickel in Western Australia, which has affected the livelihoods of thousands of workers, mining company, BHP, announced on Thursday that it would temporarily suspend its operations.
The company noted that it could not overcome the challenges caused by the oversupply.
Although nickel is a vital component of electric vehicle batteries, the oversupply of the mineral from Indonesia has caused prices to fall.
In the 18 months prior to this, the global average price of nickel was around US$29,000 a metric ton.
BHP, which is a global mining company, said it would suspend its operations in Western Australia.
It will also stop the development of its West Musgrave project. The company noted that its nickel division had a loss of around $450 million in the financial year 2024.
The company will suspend its operations in the region until February 2027.
In response to the affected workers, BHP noted that it would provide them with redeployment opportunities within the company. It also said that it would try to find other jobs for those who are still working in the Western Australia Nickel operations.
To support the local community and business affected by the suspension of its operations, the company is establishing a $20 million fund.
It is expected that around 400 workers will be able to continue working in the nickel division once the market conditions improve.
In addition, the company will spend around $450 million annually to restart the operations.
Madeleine King, the Minister for Resources, said that the decision was disappointing.
She noted that the government had worked with the industry to address the oversupply issue and ensure that the country’s nickel production would continue.
In February, the government added nickel to the list of critical minerals, which allowed projects to be considered for the $4 billion facility.
In May, the government announced a production tax incentive for minerals.
However, it is clear the challenges that Nickel West is experiencing due to the oversupply and the current market conditions have caused BHP to suspend its operations.