CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
BHP Billiton, the world’s largest mining company, said on Wednesday it has scrapped the sale of Nickel West and will continue operating the unit after failing to find a buyer at the right price.
BHP in May began a review of the nickel business – comprising the Mt Keith, Cliffs and Leinster mines and associated concentrators, the Kalgoorlie smelter, the Kambalda concentrator and the Kwinana refinery – that left open the possibility of a closure if a no buyer was found.
BHP said the review was complete and the preferred option, the sale of the unit, had “not been achieved on an acceptable basis.”
The Nickel West division has long-suffered from high costs associated with operating in Australia and Chief Executive Andrew Mackenzie had made it clear it fell outside his focus on “four pillars of growth” – iron ore, copper, petroleum and coal.
In August, Nickel West was excluded from a plan to spin off other unwanted divisions, producing manganese, aluminium, zinc and coal, into a separate company, as BHP did not want to saddle the new company with a business that is burning cash.
At the time, Swiss-based commodities and mining giant Glencore Plc and Chinese nickel producer Jinchuan Group were the front-runners bidding for Nickel West.
Estimates on how much BHP could have fetched for Nickel West varied greatly, with some analysts and industry sources putting it at as much as $1 billion, while others saw it worth much less amid questions over the outlook for nickel prices.
When BHP put the business up for sale in May, nickel prices had soared 50 percent since the start of the year on the back of an Indonesian ban on nickel ore exports. Prices have since fallen 26 percent from their peak this year.
In the 12 months to June 30, 2015, Nickel West is scheduled to produce 95,000 tonnes of nickel, 55 percent of which is to be produced from third-party ores.
“The focus of Nickel West will remain on delivering safe and efficient production whilst pursuing every opportunity to maximise productivity, to reduce operating costs and increase free cash flow,” Nickel West Asset President Paul Harvey said in a statement.
(Reporting by Lincoln Feast and Sonali Paul; Editing by Kevin Liffey and Alan Crosby)
