"BHP Group will shutter its Australian nickel operations later this year due to a global glut of the metal, one of the key ingredients in batteries for electric vehicles.
The decision to mothball the unprofitable nickel mines and processing operations, as well as a recently acquired project, follows a downturn in battery-metals markets that has left a trail of mine closures and job losses, especially in Australia.
The suspension, which Australia-based BHP says could last several years, cuts off a key Western source of nickel capable of supplying enough metal to make 700,000 EV batteries each year. It is a blow to U.S. efforts to lessen American companies' dependency on China, whose companies have been tightening their grip on global nickel supply with big investments in nickel-rich Indonesia.
Until recently, BHP -- the world's biggest miner by market value -- highlighted nickel as a priority for growth, alongside industrial metal copper and fertilizer ingredient potash. But prices for the metal have nearly halved since the start of last year as a surge in cheap Indonesian exports swamped the global market.
The head of BHP's Australian operations, Geraldine Slattery, said BHP and other miners have been surprised by just how quickly nickel supply increased. Producers including Switzerland-based Glencore and Canada's First Quantum Minerals also have suspended nickel mines.
"Could we have seen this coming?" Slattery told reporters on a call. "I guess we are all asking ourselves that question."
Nickel isn't the only commodity used in the global energy transition that is having a tough time; prices of lithium also have slumped amid a rise in global supplies.
BHP had considered a sale of the operations known as Nickel West as recently as 2019, but chose to retain them as expectations of a battery boom intensified. Nickel is primarily used in stainless steel, which accounts for more than 60% of global demand for the metal, although its use in EV batteries has been rising sharply.
BHP expanded its Australian operations to produce nickel sulfate, which is used in the lithium-ion batteries that power electric cars.
Yet BHP has struggled to make its nickel operations profitable, despite investing around $3 billion in the business since the start of this decade. The miner estimates the operations will record an underlying loss of roughly $300 million for the fiscal year ended June 30, 2024.
"Clearly it's not viable to continue operating under these significant and sustained losses," said Slattery.
The miner is speaking to its customers about the suspension, she said. BHP has previously signed supply deals with Tesla and Ford Motor. She declined to comment further.
BHP will suspend the operations in October and intends to review the decision by February 2027, it said." [1]
No country is able to fight market forces for long time, even America is not able to.
1. Business News: Australia's BHP To Halt Domestic Nickel Operations. Hoyle, Rhiannon. Wall Street Journal, Eastern edition; New York, N.Y.. 12 July 2024: B.3.
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