Mining giant BHP is holding talks about Indonesia’s nickel industry following the shut down of its vast nickel operations in Western Australia.
Meidy Katrin Lengkey, the secretary-general of the Indonesia Nickel Mining Association, told NewsWire BHP had been in discussions with Indonesian policymakers for “several months”.
“Based on my knowledge, BHP is indeed in discussions with the Indonesian government regarding potential investment in Indonesia’s nickel sector,” she said on Tuesday.
“These discussions have been ongoing for several months, although the specific details have not been officially announced.
“BHP is known to be interested in Indonesia’s abundant and prospective nickel potential.”
But The West Australian understands BHP has not been sounding out investment opportunities in Indonesia and is instead trying to uncover more information about the country’s future nickel ambitions.
Media outlet Indonesia Business Post first reported on the discussions in an article from July 30.
Indonesia’s nickel industry has escalated rapidly after Indonesian President Joko Widodo banned nickel exports, sparking a rush of Chinese investment into the southeast Asian nation’s processing capacity.
The sudden boom in Indonesian supply depressed nickel prices and was a key factor in BHP’s decision to temporarily shutter its operations in WA.
Indonesia is now trying to diversify its nickel investment horizons beyond China in order to build stronger trade ties with the United States.
Global nickel prices averaged more than US$25,000 a tonne in the 18 months from the start of 2022 to US$16,725 in mid July.
“Like others in the Australian nickel sector, we have not been able to overcome the substantial economic challenges driven by a global oversupply of nickel,” BHP President Australia Geraldine Slattery said on July 11 in announcing the shut down.
BHP’s shut down has put the division’s 2500 jobs in limbo, though the company has pledged to protect its frontline workers.
“Every frontline employee will be offered another role within BHP and best endeavours will also be made to identify redeployment opportunities for other employees engaged in the day-to-day operations of Western Australia Nickel,” the company has said.
The company will also establish a $20m community fund to support local communities and business impacted by the suspension.
It is understood some 400 workers will remain in the nickel division to restart operations if market conditions improve.
The company will invest $450m a year into the division to enable a restart.
The company, which mines iron ore, coal, copper and nickel, will suspend mining and processing operations at its Kwinana nickel refinery, Kalgoorlie nickel smelter and Mt Keith and Leinster operations and suspend development of the West Musgrave project.
In the financial year to June 30, 2024, BHP reported an underlying loss of about $450m at its nickel division.
The company will suspend operations until February 2027.
Nickel is a critical mineral used in electric vehicle batteries.
BHP’s apparent interest in Indonesia comes as President-elect Prabowo Subianto meets with Prime Minister Anthony Albanese in Canberra to finalise a new defence agreement.
Mr Subianto will run Indonesia for a five-year term from October alongside Vice-President Gibran Rakabuming Raka, the son of outgoing President Widodo, after winning the presidential election in February.
BHP will release its full year results for the 2024 financial year next week.