BHP Group announced on Thursday a reassessment of the value of its nickel operations following a significant price decline, potentially leading to write-downs amid oversupply in the electric vehicle battery metal market.
As the world’s largest listed miner, BHP, which entered into a nickel supply deal with Tesla in 2021, is revisiting its business strategy after a 40% drop in nickel prices over the past year.
The company is exploring options to address the impact of this price decline and will provide further details during its half-year results on February 20.
The ongoing carrying value assessment could result in write-downs, particularly for the West Musgrave nickel project acquired with the purchase of OZ Minerals. BHP may also consider putting its Nickel West unit, inclusive of the Kwinana plant, up for strategic review or delay planned investments.
Despite the nickel division accounting for less than 1% of earnings, it remains a significant component of BHP’s green energy marketing strategy.
The company reported a 2.2% decline in second-quarter iron ore production, in line with analyst predictions, and expressed condolences after a worker fatality at its BHP Mitsubishi Alliance coal business. Quarterly copper production also decreased by 4% due to lower concentrator grades at the Escondida mine in Chile.
