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Western Australia Nickel to temporarily suspend operations
BHP Group Limited
BHP Group Limited ABN 49 004 028 077
Registered in Australia
Registered Office: Level 18, 171 Collins Street Melbourne VIC 3000
Share code: BHG
ISIN: AU000000BHP4
Exchange release
11 July 2024
Western Australia Nickel to temporarily suspend operations
BHP announces that the Nickel West operations and West Musgrave project (Western Australia
Nickel) will be temporarily suspended from October 2024. BHP intends to review the decision to
temporarily suspend Western Australia Nickel by February 2027.
The decision to temporarily suspend Western Australia Nickel follows 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.
During the temporary suspension, BHP will continue to support its workforce and local communities.
BHP will invest approximately US$300 million (AU$450 million) per annum following completion of a
transition period to support a potential re-start of Western Australia Nickel.
The transition period will commence from July 2024. Operations will be suspended in October 2024
and handover activities for temporary suspension will be completed by December 2024.
During the temporary suspension, BHP will:
• suspend mining and processing operations at the Kwinana nickel refinery, Kalgoorlie nickel
smelter and Mt Keith and Leinster operations and the development of the West Musgrave
project;
• implement a care and maintenance program of work to ensure the ongoing safety and
integrity of its mines and related infrastructure;
• continue to invest in exploration to extend the resource life of Western Australia Nickel and
preserve optionality; and
• offer Western Australia Nickel frontline employees another role within BHP or the choice of a
redundancy and establish a AU$20 million Community Fund to support local communities
during the temporary suspension.
Since FY2020 BHP has invested approximately US$3 billion (AU$4.4 billion) to sustain Western
Australia Nickel as an ongoing business and to reorient its production to the battery and electric
vehicle market. This includes establishing Australia's first nickel sulphate plant to enhance
downstream infrastructure, building two new mines and investing in the development of two solar
farms and battery storage. Western Australia Nickel has recorded negative cash flow every year
during this period.
Despite the significant capital investments, lower global nickel prices have contributed to Western
Australia Nickel expecting to report an underlying EBITDA loss of approximately US$300 million in the
financial year to 30 June 2024.1
In February 2024, BHP announced plans to review Western Australia Nickel and a non-cash
impairment charge of approximately US$3.5 billion (AU$5.1 billion) pre-tax against the carrying value
of Western Australia Nickel. As a result of the decision to temporarily suspend operations, BHP
expects to recognise a further non-cash impairment charge of US$0.3 billion (AU$0.45 billion) pre-tax
as an exceptional item in the Group's FY2024 Financial Statements.
Any redundancy payments and other contractual costs triggered by the decision to place Western
Australia Nickel into temporary suspension would be recognised in the Group's HY2025 Financial
Statements.
BHP's President Australia, Geraldine Slattery said:
"We understand this is a challenging period for the Western Australia Nickel team and surrounding
communities. Every frontline employee will be offered another role within BHP, and best endeavours
will also be made to identify redeployment opportunities for other employees engaged in the day-to-
day operations of Western Australia Nickel.
We will also work closely with local communities, Traditional Owners and suppliers to support a
responsible transition process, which will include the establishment of a AU$20 million Community
Fund.
Since BHP announced a review of Western Australia Nickel in February, we have explored options to
stem losses in the short-term and identify a viable path forward for the business.
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.
We have made the difficult but necessary decision to temporarily suspend the Nickel West operation
and West Musgrave project.
We will continue to invest approximately AU$450 million (US$300 million) per annum in the Western
Australia Nickel facilities to enable a potential re-start. Western Australia remains an important
investment destination for BHP globally, with investment in the State expected to be greater than
AU$12 billion over the next five years and we will continue to work with all of our Western Australian
partners to advance the economic prosperity of the State."
1 The underlying EBITDA loss figure is preliminary and subject to review and finalisation in BHP's full year results for the period
ending 30 June 2024.
Authorised for release by Stefanie Wilkinson, Group General Counsel and Group Company Secretary
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
BHP Group Limited ABN 49 004 028 077
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BHP Group Limited
ABN 49 004 028 077
LEI WZE1WSENV6JSZFK0JC28
Registered in Australia
Level 18, 171 Collins Street
Melbourne
Victoria 3000 Australia
Tel: +61 1300 55 4757 Fax: +61 3 9609 3015
BHP Group is headquartered in Australia
bhp.com
BHP Group Limited ABN 49 004 028 077
Date: 11-07-2024 08:45:00
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