Mining giant BHP Group’s net profit for the first fiscal half fell as much as 86% from a year earlier. The culprit is a key metal that has become a key element in the energy transition because of its widespread use in electric car batteries – nickel. Oversupply in the nickel market has forced the world’s largest mining company to reduce the value of key assets, Bloomberg writes.
BHP has announced it will take a $2.5 billion write-down on the value of its Australian nickel mining assets, which could be closed later this year. Global supplies of the metal rose after Indonesia rapidly ramped up production, which plunged market prices and led to the shutdown of several mining projects in the country in 2023.
From shortage to surplus – prices of this metal collapsed after historic highs in 2022
Nickel prices collapsed in 2023 to $23,300 per ton
“There will be a long period of oversupply”
The period of oversupply will be long, possibly lasting until the end of this decade, BHP Group CEO Mike Henry told Bloomberg.
“The attention we need to pay to nickel is also related to what we do with our business in the interim given that it is currently in a loss and has been for some time.Henry commented.
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The miner’s core operating profit in the six months to 2023 to December 31 was flat at $6.57 billion, or slightly below analysts’ estimates. Still, the huge drop in net profit is at the center of investors’ focus.
Huge demand for raw materials in recent years has hit BHP’s profitability. It’s a trend that began during the pandemic and has continued because of the deteriorating outlook for China’s economy, and specifically its construction sector. Excluding nickel, iron ore remains the most important source of revenue for the company. Prices of the raw material for steel production jumped 28% and remain at an all-time high.
The country that wants to provide 65% of nickel exports in the world within 2 years
The world’s largest nickel plant is also under construction in the country, which is the 4th most populous
2024-02-21 12:03:30
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