Cash curbs leave Nickel West on borrowed time
BHP Billiton executives have told staff that Nickel West could cease to exist by the end of the decade, casting a new shadow of uncertainty over the future of the asset's 1800 workers and the broader WA nickel industry.
The global giant has held a series of staff briefings since _WestBusiness _ revealed on Wednesday it had shelved plans to sell Nickel West after failing to find a buyer prepared to pay its price.
Sources say Nickel West staff were told there would be no significant new capital injections and BHP expected the unit would cease to exist by 2019.
That date would coincide with the expiry of major offtake and supply contracts, sources say, and with the likely life of its nickel mines and smelting and refining operations.
BHP confirmed this week it had also canned development of one of its most promising WA nickel discoveries, standing down 90 employees working on Leinster's Venus deposit.
No other big job losses are expected in the near term, but sources suggest BHP has also started to cancel planned major works at its refinery and smelter.
A BHP spokeswoman would not comment on Nickel West's long-term future but said staff had been made aware that "intense internal competition" meant the business was unlikely to receive investment beyond the sustaining capital needed to ensure it "continues to deliver safe and efficient production".
"The life of Nickel West, as is the case with any mining operation, will be influenced by a range of factors, including resources and reserves, market conditions and other factors," she said.
"We will continue to meet all of our existing contractual obligations with government and third parties, and our community investment commitments."
Sources say Nickel West's life- span would likely be determined by the Kalgoorlie smelter, which employs about 400 workers and would need a major rebuild in the next five years, which could cost tens of millions of dollars.
BHP's decision will also force other WA operators to find alternative means of selling their product in the medium term. Nickel West is the only buyer of nickel ore in WA and its Kambalda concentrator is used by companies such as Mincor, Panoramic Resources and Independence Group.
The trio had previously been linked to an effort to buy the concentrator during the sale process and may revisit such an option in future.
BHP shares closed unchanged yesterday at $33.25.
