Wyloo Metals, a private investment company owned by iron ore billionaire Andrew Forrest, has announced the decision to place its Australian Kambalda nickel operations on care and maintenance by the end of May. The move is attributed to persistently low nickel prices impacting the sector.
The miner, which recently acquired Mincor’s Kambalda nickel operations for $504 million, supplies concentrate to BHP Group’s Nickel West operations in Southern Perth. BHP, in turn, has a crucial agreement to supply Tesla with nickel, a key component in electric vehicle batteries.
Wyloo CEO Luca Giacovazzi acknowledged the challenging market conditions, stating, “We are exploring a number of options for the long-term future of our business.” Despite the current downturn, Giacovazzi expressed confidence in the long-term fundamentals for Australian nickel, highlighting the company’s commitment to navigating the challenging market landscape.
Nickel prices have faced significant headwinds, with futures dropping below $16,000 per tonne, nearing a near-three-year low recorded on January 4th. The negative outlook is compounded by investors scaling back expectations of interest rate cuts and increased LME inventories, along with China’s sluggish economic recovery.
Additionally, robust supply from major producers, including Indonesia, the Philippines, and China, has contributed to the bearish trend. The International Nickel Study Group forecasts a surplus of 239,000 metric tons in 2024, further amplifying the challenges faced by the industry.
The move by Wyloo Metals follows a broader trend in the nickel mining sector, with companies announcing writedowns and restructuring initiatives. BHP Group also recently flagged the possibility of writedowns at its operations, indicating the severity of the current market conditions.
Information for this briefing was found via Yahoo News, Australian Mining, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
