MELBOURNE (Reuters) – Australian miner BHP Group said on Thursday it would temporarily suspend operations at its Nickel West and West Musgrave projects from October as it grapples with a sharp drop in metals prices and oversupply in the global market.
The world’s largest listed miner is set to review its decision to temporarily suspend its nickel operations in Western Australia by February 2027.
“We have not been able to overcome the significant economic challenges caused by the global oversupply of nickel,” said Geraldine Slattery, head of BHP Australia.
BHP will invest around $300 million annually after a transition period to support a potential restart of the nickel business.
Nickel prices have recovered from three-year lows below $16,000 hit at the start of the year, but are still about a quarter below year-ago levels.
Global nickel producers have been under pressure from the emergence of Indonesia as a supply powerhouse and the move away from nickel use in batteries, contributing to a 40% drop in the price of the metal over the past year to about $16,800 per metric ton.
Australia is trying to develop a processing industry to add value to mineral resources such as nickel and rare earths that are key to the shift away from fossil fuels, including a move into battery chemicals.
But producers face structural problems such as low prices and high construction and labor costs.
Australian battery metals producer IGO said on Thursday it had halted a study to develop a plant to produce raw materials for battery chemicals amid falling nickel prices.
BHP will release its quarterly production report next Wednesday.