BHP says it could be several months before deciding the fate of its nickel division as the federal and state governments weigh additional support to keep the embattled sector alive.
BHP says it could be several months before deciding the fate of its nickel division as the federal and state governments weigh additional support to keep the embattled sector alive.
Chief executive Mike Henry signalled that the measures already proposed, including royalty relief, may not be enough to save the 3,000 jobs in BHP’s Nickel West business.
“It could be that even policies like a production tax credit won’t be enough to alter course for those players who move their operations into care and maintenance already, or potentially for BHP,” Mr Henry said.
That was because the global nickel market “is so stressed at the moment and it’s likely to remain so for years ahead”.
There has been a surge in supply from Indonesia with BHP saying about one half of global nickel production was estimated to be loss-making.
Mr Henry explained that BHP faced a more difficult decision than other nickel miners that have decided to mothball their operations.
“Our business is different than the other nickel players who’ve already moved their assets into care and maintenance in that we have a smelter and refinery.
“It’s a much more complex decision to look at how you move those into a period of care and maintenance and preserve the realistic ability to move them out of care and maintenance in due course.
“So we’ll be investing in that effort and considering those alternatives in the months ahead.”
Prime Minister Anthony Albanese said his government was continuing to talk on nickel support options, including production tax credits, but has not provided a timeline for further relief.
Speaking in Perth this morning, Mr Albanese said his government was considering a range of measures to support the languishing nickel sector.
“One option that has been put forward by some is… production tax credits, but that’s been put forward in other contexts as well,” he said.
“We understand that the nickel industry is an important one, we want to provide it support, that’s why we listed it as a critical industry.
“We will engage, including engagement with the WA Premier here, about the way in which we can support this industry.”
His comments came on the same morning as BHP shared its half-year results, weighed down by a big impairment on its Western Australian nickel assets in the wake of the commodity’s price challenges.
In reporting its results, BHP chief executive Mike Henry pointed to changes to the nation’s industrial relations and environmental laws as potentially damaging to productivity in its business.
“In Australia, the mining industry is facing near-term headwinds in developing resources and it’s essential that the right industrial relations and fiscal settings are in place to support the sector’s ability to compete and win in global markets,” he said.
The company said IR reforms which recently passed the parliament would “add to our labour costs and reduce the international competitiveness of the Australian economy”.
It has been a vocal opponent of the same job, same pay policy which is a key part of the recently passed reform.
Despite these concerns, BHP said today it has approved a $US943 million ($A1.45 billion) investment in a new iron ore mine in the Pilbara.
The Western Ridge Crusher Project, near the town of Newman, is expected to deliver about 25 million tonnes per annum from FY28 to replace production from depleting mines in the area.
The project scope includes a new 30 Mtpa primary crusher and a 12-kilometre conveyor to existing processing infrastructure at Mt Whaleback.
It has a ‘capital intensity’ of just US$38 per tonne – with iron ore selling around $US130 per tonne, it will help to sustain the high profits in the iron ore business.
Meanwhile, Mr Albanese defended his government’s recent changes to policy, including the Safeguard Mechanism which levies a carbon price for direct emissions from big industrial users.
“We support productivity, and we support the Safeguard Mechanism, that was overwhelmingly supported by business and the business community,” he said.
“They overwhelmingly said that what they wanted was certainty – they have that certainty.”
BHP anticipates it will need to purchase carbon credits to meet its obligations in the years ahead.
The policy shifts come as Australian nickel has been hit hard by a massive uptick in supply from Indonesia, which has caused prices to almost halve over the past 12 months.
Mr Albanese would not be drawn on the conversations he had with Premier Roger Cook at yesterday’s Cabinet meeting in Perth, but said the pair were working to offer support to the sector.
“We’ll work these issues through,” he said.
“Both of us want to see the nickel industry not only get through this current difficulty but thrive into the future.”
The Premier said his federal counterparts shared his “sense of urgency” around the nickel issue.
“I know that they’ll be looking at measures needed to assist people,” he said.
“In particular, I’m concerned about the downstream processors, because they play an important role of adding value to that mineral resource.”
