While BHP chief executive officer Mike Henry foresees the nickel winter extending to the end of the decade, he believes it’s not all doom and gloom for the company.
BHP took a hit from the nickel downturn in its half-year results, but Henry said the company is fortunate that nickel is its smallest business.
“Yes, it’s been one of the three areas of production growth that we’ve called out for BHP … but having said that, it’s always been the smallest … business within the BHP portfolio, and in terms of the growth outlook for the company,” BHP chief executive officer Mike Henry told the ABC.
Henry cited a boom in Indonesian nickel supply as creating a temporary softening in prices overall.
“We think that’s going to persist for a period of time, potentially until the end of this decade, at which time we’ll see the market come back into balance and things will look more positive for nickel again,” he said.
Amid the nickel downturn, BHP has flagged the potential closure of its Nickel West operations. Henry said it’s important to remember the role BHP plays in other areas as well.
“A small part of the business, being nickel, has seen market challenges in the past 12 months, and that’s resulted in an impairment and a potential move into care and maintenance,” he told the ABC.
“But there’s 17 million Australians who depend upon BHP, either directly as shareholders, or indirectly through superannuation funds, for a successful and high-performing BHP.
“That creates a real sense of accountability on our part, to ensure that we’re taking the right decision, taking into account a range of considerations, both shareholder and other stakeholders, and we’re in that process as we speak.”
As for the future of the company, Henry is confident BHP will continue to lead the industry across its global operations.
“It’s the reason why we’ve sought to ensure that our iron ore business is operating as productively as possible, and it’s right at the low end of the cost curve, because we know that competition in that industry is going to heat up in the years ahead,” he told the ABC.
“We’ve successfully established ourselves as the lowest cost, major producer of iron ore globally, and we’ve held that position for a number of years now, and that business is performing really strongly.
“We believe that there’s going to be a market for ore from the Pilbara for some time.”
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