Nickel mine closed for safety

About 200 workers face an uncertain future after BHP Billiton made the rare decision to close a mine on safety grounds.

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.