Nickel region on edge as BHP looks for exit – by Paul Garvey (The Australian – August 23, 2014)

AS a lifelong resident of the Kambalda region, shire president Mal Cullen has watched the fortunes of the town wax and wane in line with the price of the nickel that has been pulled out of the ground there for almost 50 years.

The residents of Kambalda, in Western Australia’s Goldfields, have become accustomed to the volatility of the nickel price and the impact it can have on their lives. But just as the nickel price appeared to be starting to emerge from years in the doldrums, BHP’s decision to get rid of its assets in the region has brought a new level of uncertainty to the town.

BHP surprised the market when it opted to exclude its Nickel West division from the spin-off it announced this week, with BHP chief executive Andrew Mackenzie instead saying the group would push ahead with a long-running trade sale that is yet to flush out a deal. The assets were deemed to be too mature and too marginal to be lumbered into the spin-off. The failure to find a new owner so far, coupled with their exclusion from the spin-off, leaves the assets looking like the orphan that nobody wants.

For the people of Kambalda and the smaller nickel miners that feed ore into the Nickel West concentrator and smelter, the idea the operations could be shut down ­altogether is difficult to comprehend.

“It would be a worry because there are 1000-odd people that work at the smelter, and then you’ve got the concentrator in Kambalda,” Cullen tells The Weekend Australian.

“It would have a pretty dramatic impact on the whole region, not just Kambalda.”

The uncertainty around Nickel West’s future comes on the back of what he says have been a “grim” few years for the town. Nickel miners in the region have been making big cost cuts in an effort to remain profitable. House prices have fallen by more than 30 per cent, a number of once-thriving sporting clubs have folded while others are struggling to survive.

The volatility of swinging nickel prices has become a part of life in the town.

“People do adapt to the uncertainty, and we’re lucky in a way that there are some other mines in the vicinity,” Cullen says.

“There’s some mines north of Coolgardie that have just opened up and that’s taken up a bit of the slack, but people definitely feel uncertain in a downturn. There have been quite a few people who have left the region.”

Whether even more people end up leaving depends on whether BHP can finally find a buyer. So far, however, the sale process ­appears stalled.

Despite BHP’s public statements about the maturity and poor profitability of the business, its price expectations for Nickel West is said to be well in excess of the offers it has received to date.

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