Mining giant BHP has announced it’s putting its WA nickel mines on ice for at least three years, blaming an “oversupply in the global nickel market.”

In a statement on Thursday afternoon, BHP said it would begin suspending its operations at the Kwinana nickel refinery in Perth, the Kalgoorlie smelter and its major mines at Mt Keith and Leinster from October.

It said the decision will be reviewed in February 2027 and it will continue to invest about $450 million a year to support a potential restart.

In a statement, WA Premier Roger Cook said the move would affect thousands of workers.

“My government will do whatever it takes to support those workers and our regional communities through this difficult time,” he said.

The affected mines include BHP’s Nickel West operations and West Musgraves project in the Goldfields.

The miner said projections indicate nickel prices over the next five years would fall sharply, giving way to the strong growth of cheaper nickel produced elsewhere.

Redundancies and redeployments

BHP’s WA nickel asset president Jessica Farrell fronted a press conference on Thursday evening and said 1,600 frontline workers across the operations would be directly impacted.

“Anyone in our frontline that wants a job with BHP has a job with BHP,” she said, although no detail was given on those proposed redeployments.

“We’re continuing to work with all of our other employees and support businesses on options where we can for redeployment.”

Ms Farrell said any of those frontline workers who chose to take a redundancy would be given one.

She said the decision was “difficult but necessary”.

“We’ve obviously made this decision on the basis that we see an oversupply in the nickel market,” Ms Farrell said.

“We see that oversupply persisting into the latter part of this decade, but obviously will review our decision in 2027.

BHP said it would establish a $20 million community fund to support the towns affected by the closures, though it was unclear what that money would be spent on at this stage.

The decision was not unexpected, with the miner announcing its intention to mothball its nickel operations earlier this year.

Mines and Petroleum Minister David Michael said the move demonstrated the volatile nature of the market.

“This is a reminder that the mining industry is subject to cyclical commodity price fluctuations and other market forces beyond its control,” he said.

“I am hopeful that many employees will remain with BHP given its commitment to redeploy all front-line workers.”

‘Economic fallout’

The economic pain of the closures will be most acute in WA’s Goldfields where BHP runs its Kalgoorlie nickel smelter, and Mt Keith and Leinster operations.

City of Kalgoorlie-Boulder Mayor Glenn Wilson said the economic consequences would be significant for the region.

“It’s going to be interesting to see the economic fallout, because we’ve got many of our service industry that support BHP from Kalgoorlie-Boulder, all of those will be affected by this suspension.”