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BHP considers closing WA Nickel, flags impairments

It is an uncertain time for the Western Australia nickel industry

It is an uncertain time for the Western Australia nickel industry

15th February 2024

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Diversified mining major BHP is considering closing its Western Australia Nickel operations, amid the sharp fall in prices, the company announced on Thursday.

BHP said it could place Nickel West into care and maintenance and that it was assessing the phasing and capital spend for the development of the West Musgrave project, acquired as part of the OZ Minerals acquisition.

Construction of West Musgrave started in November 2022 and the project, which will produce 27 000 t/y of nickel and 33 000 t/y of copper, is about 21% complete.

Nickel West’s Kambalda concentrator will go into care and maintenance in June, following Wyloo’s decision to suspend operations at two mines that provide the majority feed into the concentrator.

“This is an uncertain time for the Western Australia nickel industry and we are taking action to address the current market conditions,” said CEO Mike Henry.

BHP has flagged a noncash impairment charge of about $2.5-billion against the carrying value of Western Australia Nickel, which comprises the Nickel West operations and the West Musgrave project.

The impairment reduces the carrying value of Western Australia Nickel’s net operating assets to a negative $0.3-billion, including closure and rehabilitation provisions of about $0.9-billion.

Meanwhile, BHP said it would also recognise an income statement charge of $3.2-billion in relation to the Samarco dam failure, in Brazil.

BHP Brasil’s provision for the Samarco dam failure will be $6.5-billion as at December 31, 2023.

BHP Brasil’s provision for the Samarco dam failure at June 30, 2023 was $3.7-billion, of which $0.3-billion was used in the period to December 31. 

The exceptional item to be recognised in BHP’s 2024 results predominantly reflects the assessment of the estimated costs to resolve all aspects of the Federal Public Prosecution Office Claim and the Framework Agreement obligations.

The Brazilian Federal Public Prosecution Office in 2016 brought a claim against Samarco, BHP Billiton Brasil and Vale seeking R$155-billion (about $32-billion) for reparation, compensation and moral damages in relation to the Samarco dam failure.

Edited by Creamer Media Reporter

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