Calls for Albanese to act as national nickel mining industry teeters on edge of disaster after BHP bombshell

The future of the national nickel industry hangs by a thread — with thousands of jobs in the balance — after BHP revealed it was considering mothballing its entire WA operation.

The announcement represents the potential death knell for a sector already teetering on the verge of collapse after being undercut by a flood of cheap Indonesian supply and lower than expected demand for battery minerals.

Premier Roger Cook is poised to announce royalty relief for nickel miners but there are fears the intervention has come too late and is not enough to prevent further closures without decisive support from the Albanese Government.

Calls for immediate action from both the resources sector and the WA State Opposition reached fever pitch on Thursday after BHP revealed it was mulling placing Nickel West — which employs 3300 workers — into “a period of care and maintenance”.

Mr Cook labelled the development “extremely concerning” and said the global nickel industry was experiencing “structural disruption” sparked by the rapid acceleration of Indonesian production.

The Premier said he had been in “almost daily” contact with Federal Resources Minister Madeleine King for the past week and met with industry representatives on Wednesday night.

“Obviously we have some levers around royalty relief and royalty rebates, and we’re looking at all options in terms of how we can support the industry,” Mr Cook said.

However, with five nickel miners having already announced plans to close or scale down production – claiming 1200 jobs – Mr Cook added the crisis required “heavy lifting” from “governments at all levels”.

“It’s not a one-size-fits-all all,” the Premier said.

“The issues which are confronting BHP today, as a large player with significant investments in terms of downstream processing… are very different from the challenges which are confronting (First Quantum Minerals) who are currently mining in the Ravensthorpe area.”

In addition to royalty relief, one of the key asks emerging from a nickel industry roundtable convened in Perth three weeks ago was Commonwealth tax credits refunding up to 10 per cent of production costs for chemicals such as nickel sulphate.

Mr Cook appeared to throw his support behind those calls on Thursday, stressing the current price depression was “not a market cyclical issue” and needed longer-term solutions.

Nickel West operates a Kalgoorlie smelter and Kwinana refinery that are integral to the overall viability of the industry because they provide an avenue for other miners to enter the downstream supply chain.

Since September 2023, WA’s nickel industry has seen five miners close or scale down production, including Panoramic Resources, Nickel West — which previously announced it would temporarily shutter its Kambalda concentrator — Wyloo and FQM.

Chamber of Minerals and Energy WA chief executive Rebecca Tomkinson said she was encouraged by progress on royalty relief but that a broader range of measures were required, and quickly.

“The State and Federal governments need to ensure the volume is turned up because this is a call to action, not complacency,” she said.

“At a Federal level the production tax credit and initiatives that promote investment and reduce financing, capital or operating costs are all options that need advancing, along with strong advocacy with our trading partners to support the development of ESG transparency in critical and battery minerals markets.”

Association of Mining and Exploration Companies chief executive Warren Pearce said while no single silver bullet would save the nickel industry, “there is a clear need for intervention”.

“Both State and Federal Government can come together with bespoke measures that can support projects still in operation, and those already in care and maintenance,” Mr Pearce said.

“We’re facing intense international competition to develop critical minerals projects, and other nations are investing heavily in incentives to attract mining and processing away from Australia.

“There is a real need for state and federal governments to provide incentives for critical minerals that level the playing field.”

Ms King said the challenges gripping the domestic nickel industry “cannot be addressed overnight” but that she had been in contact with BHP’s Australian boss Geraldine Slattery and Mr Cook about charting a path forward.

“BHP’s commercial decisions reflect the complex set of issues facing the industry around the world, but particularly in Australia with its high level of environmental, social and corporate governance standards,” Ms King said.

“This challenge is the direct result of extreme volatility in global nickel prices.”

In an ASX statement released Thursday, BHP said it was slashing $US3.5 billion ($5.4b) off the carrying value of its nickel assets.

That has turned an operation that as recently as 2023 was viewed as pivotal to The Big Australian’s future growth aspirations into a $US300 million liability.

That is the same amount — $US300 million — BHP said it had lost running its nickel arm for the last six months of 2023.