UPDATE 2.25pm: BHP Billiton has confirmed that its Leinster Perseverance underground nickel mine will be closed permanently, resulting in as many as 200 job losses.
The decision to close the underground mine follows the temporary suspension of operations after an earthquake on October 31.
“Since the (seismic) event, Nickel West technical and operational teams, supported by independent experts, have been assessing the technical data and risks on the sub-level cave operations and all the options available,” BHP said in a statement.
“Following this analysis, BHP Billiton has decided it is unable to safely resume operations in the sub-level cave at Perseverance mine.”
However BHP said it would continue to operate its processing facilities at Leinster and resume mining at the Rocky’s Reward open cut mine, to provide an alternative ore supply.
BHP noted the mine’s closure would result in “a reduction in the operational workforce at Leinster”. It is understood as many as 200 jobs are affected.
Nickel West asset president Paul Harvey said the company would continue to work closely with employees affected by the decision and help find redeployment opportunities within Nickel West and the broader BHP Billiton group where possible.
“As this change is implemented, we will continue to treat our people and stakeholders with the utmost care and respect and maintain our strong focus on safety,” he said.
The company said work to understand the broader implications of the decision on the Nickel West business had begun and the impact on production would be reported in BHP’s December quarter operational review.
WestBusiness revealed this morning that the mining giant was set to close its Perseverance nickel mine permanently.
Speculation about the mine's future followed a 3.7-magnitude earthquake in October, which trapped nine workers underground for almost nine hours. It came 12 months after 79 workers were evacuated following a 3 magnitude quake at the mine.
In addition to regular operational issues at Leinster, BHP is also struggling to stem losses from its Nickel West division - in which Perseverance plays an important role - at a time of weak nickel prices.
The mining giant has long been rumoured to be considering a full-scale exit from nickel.
BHP wrote down the value of Nickel West by $US1.7 billion in August, for a $US1.25 billion after-tax impairment.
This year's tumbling nickel prices saw Nickel West lose $US100 million before income tax, depreciation and amortisation, down from a profit of $83 million the previous year.
BHP shares closed flat at $35.66.