The closure of mining giant BHP’s nickel operations in Western Australia will have ripple effects far and wide and could signal “the end of the Australian nickel industry”, according to a prominent mining analyst.

BHP announced yesterday it would begin suspending operations at the Kwinana nickel refinery in Perth, the Kalgoorlie smelter and its major mines at Mt Keith and Leinster in the state’s Goldfields from October.

BHP said market conditions were to blame for its decision to either redeploy or offer redundancies to 1,600 of its frontline workers, while hundreds more contractors would be impacted.

It follows the closure of First Quantum Mineral’s Ravensthorpe nickel operation earlier this year.

Perth-based mining analyst Tim Treadgold said he could not see the nickel industry recovering from such a big player bailing out.

“It has a degree of inevitability to it … and it’s just such a shame for all those people are going to lose their jobs.”

Mr Treadgold attributed the current price decline to the oversupply of cheaper Indonesian nickel.

“People say that the Indonesian nickel is dirty nickel, [but] that doesn’t seem to worry the electric car makers,” he said.

“They just want the metal — they don’t really care where it comes from.”

He said while nickel prices were notoriously difficult to predict, he expected the downward trend to continue.  

“We’re talking about a metal, which as recently as two years ago, was just short of $50,000 a tonne,” he said.

“Now we’re talking about a metal which is $17,000 a tonne. 

“I can’t think of another commodity that moves at that pace, as far as it does.”

BHP said it may look to restart the operations in 2027.

Mr Treadgold noted that would require serious investment, given the miner’s aged infrastructure. 

He said the closure would be devastating for small communities, like Leinster and Kambalda, particularly on small businesses that supply the mines.

Mining towns worried for future

BHP said it would establish a $20 million community fund to support the towns affected by the closures.

Coolgardie shire president Malcolm Cullen said he did not think that would be “anywhere near enough”. 

But despite the job losses, he believed continued activity in the gold, lithium and exploration sectors would help cushion the blow. 

Many Kalgoorlie residents hoped workers would find new opportunities locally.

Local business identity Ron Mosby said there were always “well over a thousand” jobs available across the Goldfields region.

“Rather than redeployment to other places, we’d certainly hope to keep people in our community,” he told ABC Radio Perth.

“There are a lot of [local] opportunities in regards to the skill sets that contractors use out at BHP.”

Shaun Brown, dealer principal at Kalgoorlie’s Golden City Motors, said the town had always been resilient and believed the closure could even create opportunities.

“I don’t want to prosper on anyone else’s bad news, but it may well mean that we have a great opportunity in terms of applicants for positions that we hold and need to fill,” he said.

“One of my challenges is getting quality people. And maybe there’s some opportunity there for me, too.”

Nickel situation ‘beyond’ BHP control

Federal Resources Minister Madeline King said she believed the factors that lead to the decision were beyond the control of both the government and BHP.