June 2017
Australia’s nickel industry is in decline, losing market share as production declines, reserves are exhausted, and operations lose cost competitiveness. Recent times have seen several major closures as operations have been unable to remain economic in a period of depressed nickel prices. Will Australia’s nickel industry retreat quietly into insignificance, or will it find new ways and opportunities to regain lost ground?

Australia’s share of global finished nickel production has dropped from a high of 10% in 2009 to an expected share of 5.7% this year, with output forecast to drop further to just 3.5% of global output by 2030 based on AME’s base case supply scenario. The decline in Australia’s share of the global mined nickel market is only slightly better, dropping from 14.4% in 2005 to around 10% this year, with further declines in mined nickel market share to 5.1% expected in the long-term. The market share of Australian mined nickel producers, and performance over time, looks slightly better than that of its finished nickel producers as several significant producers of concentrate or intermediate product, such as Western Area’s Forrestania mine and First Quantum’s Ravensthorpe HPAL export product overseas.

Similarly, Australia has lost ground in terms of its competitive position on the cost curve. This can be best seen in the mined nickel cost curve, where Australia’s position has shifted from high in the third quartile of cash costs in 2007, to a position in the lower fourth quartile this year. Australia’s relative position is forecast too decline further towards the high fourth quartile of cash costs by 2030. The finished nickel cost curve shows a similar trend.

Australia’s nickel industry has traditionally been dominated by several large finished nickel producers, some of whom have their own significant mine production, and many small independent miners selling unprocessed ore or concentrate to larger downstream producers. Major finished nickel producers include:

  • BHP’s Nickel West business unit has been the dominant player in the Australian nickel industry, operating since the early 1970s. Nickel West currently produces finished nickel at its 72ktpa Kwinana refinery, the final step in a supply chain that includes the 110ktpa Kalgoorlie smelter, the Mount Keith mine and concentrator, the Leinster mine and concentrator, the Cliffs mine which feeds ore to Leinster, and the Kambalda concentrator. Kambalda processes ore from multiple third party miners in the goldfields area of Western Australia. In recent years, this has included ore from Mincor’s Mariner and Miitel mines, Panoramic’s Lanfranchi mine, Independence Group’s Long operation, and Royal Nickel’s Beta Hunt. The Kalgoorlie smelter also processes third party concentrate feed from Western Area’s Forrestania operation, and Independence Group’s Nova-Bollinger mine.




  • Glencore’s 45ktpa Murrin Murrin HPAL is now a major contributor of finished nickel in Australia. Having overcome significant operational issues which plagued its commissioning and ramp-up hitting nameplate capacity in 2013, eleven years after commissioning, the operation is now consistently producing around 46ktpa of finished nickel.
  • Queensland Nickel’s Yabulu plant was an established finished nickel producer, commencing operations in 1975 until the plant was placed on care and maintenance in 2016. It was one of the few remaining high-cost and energy intensive Caron process plants in operation globally. Capacity was expanded from 31ktpa to 76ktpa in 2007 as part of BHP Billiton’s plans to process 45ktpa of mixed hydroxide product from the Ravensthorpe HPAL in Western Australia. However, with BHP’s sale of Ravensthorpe and Yabulu soon after this, Yabulu was restricted to continued processing of imported laterite ore, retaining an effective capacity of 31ktpa.


The recent period of sustained low nickel prices seen since early 2015 has seen a number of notable operations closed or placed on care and maintenance. 

  • The Yabulu refinery was placed onto care and maintenance in early 2016, removing around 30ktpa of finished nickel production, but having no impact on Australia’s mined nickel production as all feed was sourced from overseas exporters.
  • Several small independent mines which fed into BHP’s Nickel West business unit have been closed or shuttered in recent years, including Mincor’s 4ktpa Mariners and 4ktpa Miitel mines in 2016, Panoramic’s 13ktpa Lanfranchi mine in 2015. This leaves only Independence Group’s 9ktpa Long mine, and Royal Nickel’s Beta Hunt mine which is currently producing less than 1ktpa of nickel in ore, as the sole suppliers to NHP’s Kambalda concentrator, putting the viability of continued operations there in jeopardy as the plant currently operates at less than 20% of its capacity.
  • Other mines selling concentrate to the export market have closed in recent years, including Panoramic’s 9ktpa Savannah operation.
  • The future of BHP Billiton’s Nickel West is threatened by this decline in third party feed, combined with declining reserves of its existing mining operations. The Mt Keith mine, which AME estimates currently produces around 37ktpa of nickel in concentrate, is expected to exhaust its reserves around the end of 2020. Reserves at Leinster will allow continued operations for two years.

However, there is some light on the horizon in terms of new projects, which will contribute to the long-term viability of sulphide nickel operations in Western Australia.

  • Independence Group’s recently commissioned 30ktpa Nova-Bollinger mine, with a mine life of at least 10 years, currently sells around half of its production to Nickel West’s Kalgoorlie smelter, with the rest exported.
  • The mine life of BHP Billiton’s own mining operations at Mt Keith and Leinster may also be significantly extended through the development of new deposits. The 40ktpa Yakabindie mine, located 20km from Mt Keith, will commence production around 2021, and provide ore supply to the Mt Keith concentrator for an additional 10-15 years following the exhaustion of the Mt Keith reserves. The company is also progressing the highly prospective Venus deposit near Leinster, which includes a massive sulphide Inferred Resource of 1.5Mt at 5.8% nickel grade. The company has not disclosed a mine plan for Venus, but it is expected to be progressed to prolong operations at Leinster.
  • There are many small nickel mines currently on care and maintenance due to low prices, but which could re-enter the market should improved demand help prices recover, including idled operations of Mincor and Panoramic, including operations which supply ore to the Kambalda concentrator, and also Poseidon’s 8ktpa Lake Johnston, and the 8ktpa Black Swan open cut and , and 4ktpa Silver Swan underground which will mine some of the world’s  highest grade nickel ore with a proposed diluted head grade of 6% nickel.

While there are some new mines coming on-line to maintain production, with further capacity able to reactivate in response to rising prices, Australia’s overall position in terms of market share, and position on the cost curve is unlikely to improve in any significant way. Australia will remain a significant nickel producer, but its relative performance will be eclipsed by growing production from new operations elsewhere, including the growing output from new smelters in Indonesia.