Demand from the energy transition was supposed to underpin strong prices for nickel and lithium. But the battery minerals slump appears to be entering a new phase.
The most interesting word in BHP’s December quarter operations update can be found on page 14 – “structural”. That’s how the mining giant describes the changes ripping through the nickel sector, and threatening the viability of its Nickel West project in Western Australia.
“The nickel industry is undergoing a number of structural changes and is at a cyclical low in realised pricing,” BHP said. “Nickel West is not immune to these challenges. Operations are being actively optimised, and options are being evaluated to mitigate the impacts of the sharp fall in nickel prices.” BHP also said it would consider whether it needed to take a writedown on the value of the Nickel West asset.
The pain caused by a 50 per cent fall in the nickel price, brought about mainly by a surge in nickel exports from Indonesia that has been supercharged by Chinese investment, is not new news. This month, ASX-listed Panoramic Resources slipped into voluntary administration and shut its Savannah mine in Western Australia’s Kimberley at a cost of about 300 jobs.
But we shouldn’t miss what BHP is saying here in calling out a structural change in the market. To be clear, the view inside the company has not changed in terms of nickel’s long-term demand story.
For the rest of this article: https://www.afr.com/chanticleer/bhp-s-warning-on-battery-minerals-is-striking-20240118-p5eyb3