Australian mining giant BHP said Thursday it will suspend its Western Australia Nickel operations until February 2027, when a new review is due, Kallanish reports. 

The long-awaited decision comes after BHP started a review of Western Australia Nickel in February, in response to the oversupply in the global nickel market. “Forward consensus nickel prices over the next half of the decade have fallen sharply reflecting strong growth of alternative low-cost nickel supply,” the miner explains.

A transition period will start this month. The miner will suspend its Nickel West mining and processing operations, as well as the West Musgrave project from October.

Despite investing $3 billion since 2020, BHP is expecting an underlying EBITDA loss of around $300 million for the Western Australia Nickel operations in the financial year to 30 June 2024 due to low global nickel prices.

“Like others in the Australian nickel sector, we have not been able to overcome the substantial economic challenges driven by a global oversupply of nickel,” says BHP’s president Australia, Geraldine Slattery. “We have made the difficult but necessary decision to temporarily suspend the Nickel West operation and West Musgrave project.”

Slattery notes the company will continue to invest around AUD 450 million ($300m) per year in the Western Australia Nickel assets to facilitate “a potential re-start.” Highlighting Western Australia as an “important investment destination” for the company, the executive adds investment in the state is expected to be over AUD 12 billion across the next 5 years.

BHP says it will offer all Western Australia Nickel’s frontline employees another role within the company. It will also identify redeployment opportunities for other employees. Additionally, an AUD 20m Community Fund will be set up to support local communities and businesses during the temporary suspension.

A significant increase in Indonesian supply and a drop in EV demand saw nickel prices plunge in the past year. At least six nickel facilities in Australia have either announced a reduction in operations or entered care and maintenance, prompting the Australian government to include nickel in the country’s critical minerals list early this year.

From an average price of over $25,000/tonne in the 18 months from the start of 2022, nickel price is now at $16,725/t, according to the Australian government.