BHP dips as WA nickel suspended after A$6B hit; losses eased by US CPI and forewarning

In case you missed the news coming from our biggest miner overnight, BHP (ASX:BHP) announced to the market post-close on Thursday it was suspending its WA nickel mine.

All in all, lower nickel prices have seen BHP expecting to report an underlying earnings loss of $443.5M – as well as an impairment charge due to the suspension that has climbed to A$5.62 billion.

In that context, anybody would probably rush to suspend operations. Officially, BHP expects that to look like shutdown in October.

The culprit?: Indonesian nickel backed by Chinese investment. In the early 2020’s, Indonesia became the world’s largest nickel producer, seemingly out of nowhere.

To those paying even piecemeal attention, that by now is probably old news. Nickel prices have been under pressure all year; nickel explorers have pivoted into copper and uranium and anything else that looks undersupplied.

Given that the nickel price collapse is ultimately looking like a A$6B hit to BHP – counting both the loss and the impairment – it’s probably lucky it’s otherwise a good news day for the ASX.

US inflation came in lower than expected overnight; the ASX200 has hit a fresh all time high on Friday and US markets are betting on a 100% US Fed rate cut in September.

BHP’s dip hasn’t been enough to stop the local bourse from travelling to 7,950pts on Friday.

Also softening the sell-off is that much of the price-shedding already occurred back in early 2024 when it first became evident nickel prices spelt trouble for Australian operations. You could say some of the losses are already “priced in,” though this is never quite as neat a summary of trading behaviour as the term implies.

As for when BHP’s nickel operations will fire back up, that probably depends on the topography of the global economy across the next half-decade. Only if nickel demand outpaces Indonesian supply can we see a rally, bar export licences coming from our northernmost major neighbour.

BHP last traded at $43.29.