‘More than we expected’: Madeleine King gives BHP the nod on Nickel West lifeline and echoes market optimism

Federal Resources Minister Madeleine King says BHP’s decision to mothball its WA Nickel business is “disappointing” but is backing the Big Australian’s belief that the nickel market can perform an about-turn.

Prime Minister Anthony Albanese has also weighed in, going a step further than Minister King to label BHP’s move on Thursday to shutter WA Nickel until at least February 2027 as “very disappointing” and arguing not all of the blame can be put on Indonesia.

WA Nickel has 3000 employees and BHP promised all its 1600 “front-line” Nickel West workers jobs within the broader company. About 400 roles are expected to remain at the nickel division during the “temporary suspension”.

BHP has also committed to invest about $450 million a year in the nickel facilities to enable a potential re-start and is establishing a $20m community fund “to support local communities” during the suspension.

It believes growing electric vehicle demand will help soak up a flood of cheap Indonesian nickel around 2027, despite previously stating the Indonesian supply onslaught had created a “structural” market shift.

WA Premier Roger Cook on Friday said he takes BHP “at their word” that the nickel price will “settle at a much more realistic level around 2027-28”, citing other independent forecasts. Ratings agency Fitch this month predicted the nickel price will improve from 2028.

Speaking to The West Australian on Friday Minister King “agreed with BHP’s price optimism”, echoing Premier Cook’s sentiment, and said the support package BHP has cobbled together is better than the Federal Government had initially anticipated.

“It’s certainly more than we expected a number of months ago . . . since then we’ve been in discussions with BHP,” she said.

BHP will review switching WA Nickel back on by February 2027, just five months before Federal Labor’s 10 per cent production tax credits — which Nickel West would very likely be eligible for — kick in.

Ms King conceded the 2027 timing might not be a coincidence, but noted BHP had been looking to suspend WA Nickel before the tax credits were announced in May. BHP first flagged a potential closure of WA Nickel, which Nickel West is the operational part of, in February.

“The BHP announcement is a canary in the coal mine . . . (it) shows how important these production tax credits are,” she said.

A decision five years ago by the Indonesian government to aggressively ramp up nickel output is a key factor behind BHP’s predicament, according to Ms King.

But Mr Albanese laid more of the blame on BHP for the WA Nickel pause.

“Well, certainly markets are, of course, a factor here, we are concerned about that, but this is a decision that BHP have made,” he said.

“We, frankly, find the BHP decision very disappointing.

“There has been some competition of course, from Indonesia, but it’s of a different quality as well to that produced at the Kwinana plant.”

The Kwinana refinery lies in the heart of Ms King’s electorate of Brand and while the Minister says she is yet to be inundated with calls from her constituents “that could change as the news sinks in”.

“It’s sad, no doubt, the (Kwinana) refinery is a big part of the community. I’ve driven past it literally all my life on the way to Fremantle,” she said.

“But the Kwinana precinct is extraordinarily vibrant, extraordinarily busy.”

On Thursday The West Australian revealed that IGO and Wyloo were putting plans for a huge battery metals manufacturing plant in the Kwinana industrial precinct on ice.