BHP Billiton will scour its WA nickel operations for more savings in an attempt to wait out sharp falls in commodity prices, after the sale of its Yeelirrie uranium deposit raised fresh questions about its commitment to its marginal WA operations.
Rumours of further BHP asset sales persisted yesterday. However, market sources said the global miner was unlikely to find a buyer for its local Nickel West assets and would be wary of the hit to its reputation if its Kalgoorlie nickel smelter were to close, even under a new owner.
The speculation comes after BHP yesterday sold its Yeelirrie uranium project to Canada's Cameco for $430 million, just days after it took an axe to the Port Hedland outer harbour project and parked the giant Olympic Dam expansion.
BHP has already taken some of the pain in nickel. It moved to cut costs at Nickel West earlier this year, slashing about 155 staff from the division and slowing mining at Mount Keith in favour of processing stockpiles of a previously untreatable ore through a new circuit.
The company flagged a $US449 million ($432 million) before tax write-down of Nickel West's value ahead of last week's financial figures, and a spokeswoman said yesterday that the company was still searching for ways to cut costs.
But the moves have raised questions about BHP's WA operations.
Leaving aside iron ore and the $1.5 billion development of the Macedon gas field, due to begin producing gas next year, BHP's remaining WA operations are in some of its hardest-hit divisions. After investing $3 billion in the expansion of its Worsley alumina operations, lower commodity prices and increased costs led to a $US557 million reduction in the aluminium division's underlying earnings across the globe.
BHP's stainless steel division, which includes its Nickel West operations, had a $US556 million fall in its underlying earnings.
One source said yesterday BHP would "sell it (Nickel West) for a dollar if they could find a buyer prepared to guarantee to keep it open". But finding that elusive buyer would not prove easy.
The smelter treats nickel for not only its own mines, but for most of the State's smaller nickel miners. There was also no obvious buyer with the expertise to operate a smelter and a balance sheet to make the purchase.
Canada's First Quantum Minerals, currently revitalising Ravensthorpe, had spoken of its desire for a local smelter but is now more focused on growing its African copper operations. Glencore International, which owned the Murrin Murrin nickel mine in WA, is another possibility - but the company is locked in a $US32 billion battle for Xstrata and is seen as having little time to spare for acquisitions.
BHP suffered community backlash over its 2009 decision to close the Ravenshorpe nickel mine.