​BHP won’t sell Nickel West assets

BHP has announced that it will not sell its Nickel West assets after it was unable to find a buyer on its terms.

The miner has had the assets on the table since May this year, when it looked to spin off its Mount Keith, Cliffs, and Leinster mines and concentrators, as well as the Kalgoorlie smelter, Kambalda concentrator, and Kwinana refinery.

At the time BHP said it was considering all options for the assets, with BHP CEO Andrew Mackenzie stating during decision to spin out the underperforming suite of assets in August that Nickel West was not a good fit for either BHP or Newco.

Soon after this announcement it was reportedly approached by a number of companies for the assets, including Glencore – which operates the nearby Murrin Murrin mines, X2 Resources, Sherrit International, and the Jinchuan Group.

Analysts at the time valued the Nickel West operations at around $366 million, however financial services group UBS estimated the value will run considerably into the red – $800 million due to environmental liabilities – which raised the question of whether BHP will assume some of that liability in the event of a partial sale.

Now BHP has mooted the sell-off, after being unable to find a buyer on its terms.

“This review is now complete and the preferred option, the sale of the business, has not been achieved on an acceptable basis. The Company will only pursue options that maximise value for shareholders,” BHP said in a company statement.

Instead the assets will remain in BHP’s portfolio for the time being, as a non-core asset.

Nickel West asset president, Paul Harvey, said: “The focus of Nickel West will remain on delivering safe and efficient production whilst pursuing every opportunity to maximise productivity, to reduce operating costs and increase free cash flow.”

According to The West industry sources said no final bids came close to the projected $500 to $800 million BHP wanted for the operations.

The miner reportedly also considered going as low $300 million, if the buyer would take on the environmental liabilities as the site, but still received no solid offer.

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