Andrew Forrest’s latest foray into Australian nickel mining has proved to be short-lived, with the billionaire set to shut down WA mines purchased just six months ago for $760 million amid an international meltdown in the metal’s price.
The Australian Financial Review reported on Sunday that Mr Forrest’s private company Wyloo would place the mines near Kambalda, which employ 44 full-time staff and 220 contractors, into care and maintenance from May 31.
The decision comes just a week after First Quantum announced it would cease mining and slash the workforce of its Ravensthorpe nickel mine by about 30 per cent to ensure the long-term viability of the operation.
The price of nickel on the London Metals Exchange has plunged from a high of more than $30,000 US a tonne down to just over $16,000 within a year.
The price downturn has resulted in the loss of more than 1000 WA jobs, including at Panoramic’s Savannah operations, amid concerns that BHP’s Nickel West, which employs more than 2500 people, is also under threat.
Last week, BHP issued a warning its nickel mines and downstream processing assets were not immune from the downturn.
Wyloo is a supplier to BHP’s nickel operations, which is understood to have been notified about the decision to place the Cassini, Long and Durkin mines into care and maintenance.
Wyloo chief executive Luca Giacovazzi told the Financial Review the decision had been driven by the failure of the London Metal Exchange to differentiate between nickel produced in accordance with high environmental standards, such as that in Australia, and “dirty nickel” from Indonesia.
‘‘The LME is awash with pollutive nickel, which is squeezing out clean nickel from Australian producers,’’ he said.
‘‘We need to see structural change in nickel pricing that distinguishes between nickel products as well as their ESG credentials.’’
In a press release announcing Wyloo’s purchase of the mines from Mincor Resources in July, Mr Forrest said the company would give the market a choice between “clean and dirty nickel”, telling workers he was bullish about taking on Indonesia.
“Wyloo has targeted nickel sulphides as they are the greenest and cheapest option for battery manufacturing: they have the best economics, can be processed into battery-grade nickel with the lowest environmental footprint and are fully recyclable,” he said at the time.
It is understood Wyloo planned to retain most of its staff at Kambalda, while contractors would be found other work through Fortescue Metals Group.
‘‘The decision to temporarily pause our operations in the current nickel market will allow us to develop and assess these options as we move towards our long-term strategy to mine and process nickel from our own facilities in Kambalda and Kwinana,’’ Mr Giacovazzi said.
‘‘Our priority is to support our people through this transition.’’