It’s now clear that BHP will not hold onto its Nickel West asset, with both Glencore and the Chinese Jinchuan Group vying for interest in the West Australian operation.
As such Nickel West will not form part of the demerged ‘Newco’.
There is speculation about BHP splitting Nickel West to allow each company a portion of the assets, or if it simply sells some operations and closes the rest, which could possibly maintain a foot in the door of Nickel should the company ever wish to get back in.
SMH said the nickel refiner Jinchuan would be most interested in taking over the Kalgoorlie Nickel Smelter, while Glencore shows interest in the refinery at Kwinana.
Glencore would also benefit from mining operation that could complement their Murrin Murrin operations.
Analysts have valued the Nickel West operations at around $366 million, however financial services group UBS has estimated the value will run considerably into the red, $800 million due to environmental liabilities, which raises the question of whether BHP will assume some of that liability in the event of a partial sale.
UBS have estimated the total environmental liabilities to be between $1-2 billion.
BHP CEO Andrew Mackenzie said that Nickel West is “neither a good fit with BHP Billiton nor with Newco.”
Assets under the Nickel West banner include Mount Keith, Cliffs, and Leinster mines and concentrators, as well as the Kalgoorlie smelter, Kambalda concentrator, and Kwinana refinery.