BHP is engaged in discussions with Indonesian officials about potential investments in Indonesia’s growing nickel industry, following the recent shutdown of its extensive nickel operations in Western Australia.
Meidy Katrin Lengkey, secretary-general of the Indonesia Nickel Mining Association, confirmed to NewsWire that BHP has been in talks with Indonesian policymakers for several months. “BHP is indeed exploring investment opportunities in Indonesia’s nickel sector,” she said on Tuesday. However, The West Australian reports that BHP is more focused on gathering information about Indonesia’s future nickel strategies rather than pursuing direct investments at this stage.
Indonesia’s nickel sector has rapidly expanded since President Joko Widodo imposed a ban on nickel exports, leading to a surge in Chinese investment in the country’s processing capabilities. This influx of supply has depressed global nickel prices, contributing to BHP’s decision to temporarily shut down its operations in Western Australia.
As Indonesia seeks to broaden its investment base beyond China and strengthen trade ties with the United States, BHP’s shutdown has impacted approximately 2,500 jobs within the company’s nickel division. Despite this, BHP has committed to offering alternative roles within the company for frontline workers and is establishing a $20 million community fund to support those affected by the suspension.
BHP will invest $450 million annually to facilitate a potential restart of operations if market conditions improve. The company is pausing activities at its Kwinana nickel refinery, Kalgoorlie nickel smelter, Mt Keith, and Leinster operations, and halting development of the West Musgrave project.
In the financial year ending June 30, 2024, BHP reported an underlying loss of approximately $450 million in its nickel division. Operations are expected to remain suspended until February 2027.
The company’s interest in Indonesia coincides with President-elect Prabowo Subianto’s visit to Canberra to finalize a new defense agreement with Prime Minister Anthony Albanese. Subianto will assume the Indonesian presidency in October, alongside Vice-President Gibran Rakabuming Raka.
BHP is set to release its full-year results for the 2024 financial year next week.
