Nickel mine closed for safety
BHP confirmed on Tuesday that the Perseverance nickel mine in Western Australia would close after a safety scare in October when nine men were trapped underground. That incident was linked to a seismic event nearby, but was merely the latest in a string of safety scares over the past few years.
After more than six weeks of review, BHP decided it could not guarantee the safety of workers if the mine continued operations.
"BHP has decided it is unable to safely resume operations in the sublevel cave at Perseverance mine," the company said.
While BHP shut the Gregory and Norwich Park coalmines for financial reasons last year, several observers of the company said they were unable to recall when BHP had shut an Australian mine for safety reasons.
While the decision was made on safety grounds, the financial case for the mine was hardly strong, with nickel considered one of the biggest laggards within BHP's diversified portfolio. The company revealed in August that nickel prices had averaged 15 per cent lower during the year to June 30, and its nickel assets in Western Australia suffered a $US1.2 billion ($1.3 billion) write-down in the same financial year.
The division is grouped with aluminium and manganese on the BHP balance sheet, and the three commodities delivered a combined profit of just $US164 million in fiscal 2013.
The Perseverance closure does not necessarily mean the end of nickel production in the northern goldfields of the state, with the company set to continue processing nickel on site.
Frequently Asked Questions about this Article…
BHP Billiton decided to close the Perseverance nickel mine due to safety concerns. The decision followed a safety scare in October when nine workers were trapped underground due to a seismic event. After a six-week review, BHP concluded that it could not guarantee the safety of workers if operations continued.
Approximately 200 workers face an uncertain future due to the closure of the Perseverance nickel mine. The decision to close the mine was made on safety grounds.
While BHP Billiton has closed mines for financial reasons, such as the Gregory and Norwich Park coalmines, observers noted that it is rare for BHP to shut an Australian mine for safety reasons, making the closure of the Perseverance nickel mine a notable decision.
Although the closure was primarily due to safety concerns, the financial case for the Perseverance nickel mine was weak. Nickel prices had averaged 15% lower during the year, and BHP's nickel assets in Western Australia suffered a significant write-down, contributing to the decision.
The closure of the Perseverance mine does not necessarily mean the end of nickel production in the northern goldfields of Western Australia. BHP plans to continue processing nickel on site, indicating ongoing production activities.
The nickel division, grouped with aluminium and manganese on BHP's balance sheet, delivered a combined profit of just $US164 million in fiscal 2013. This highlights the financial challenges faced by the division, including the impact of lower nickel prices.
BHP's nickel assets in Western Australia experienced a $US1.2 billion ($1.3 billion) write-down in the financial year leading up to the closure of the Perseverance mine. This significant write-down reflects the financial difficulties faced by the nickel division.
The seismic event in October led to a safety scare at the Perseverance mine, trapping nine workers underground. This incident was part of a series of safety scares over the years, ultimately leading to BHP's decision to close the mine for safety reasons.
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