A slight increase in the number of new dwellings commenced in the March quarter is welcome news for the steel industry. However, the eye-catching figure within the modest 0.5% overall rise was the increase in new private sector house commencements which rose by 4.8% to 25,072 dwellings. That said, new private house starts are still down by 6.7% on the March 2023 level. The Australian Bureau of Statistics also reports there were 226,307 total sector dwellings under construction in the March quarter of which 90,369 were new houses. In further good news, steelmaking has resumed at the Whyalla steelworks after its parent company, GFG Alliance, was able to restart the blast furnace. The furnace had become unusable when it cooled excessively during a planned routine maintenance shutdown in March. During restart efforts there were several setbacks including damage to the blast furnace shell, which halted works until the damage was eventually repaired. Australian Workers’ Union acting state secretary, Gary Henderson, offered some sage advice for future maintenance works: “We’re calling on Liberty Steel (part of GFG Alliance) when they undertake a maintenance shutdown next time — don’t lower the

(Continuation)

temperature too much.” During the shutdown many of the 1,100 employees at the steelworks were placed on reduced hours which resulted in a cut to wages of between 20 – 30%. Though nearly all departments have now gone back to regular shifts, Mr Henderson said full normality was still some time off. The steelworks is Whyalla´s main source of income.

GFG Alliance chairman, Sanjeev Gupta, said work was being done to prevent future stoppages to the blast furnace. “While we recovered the blast furnace we also began designing and working out how to best use a special-purpose oxygen and natural gas lancing system which will give us more control over restarts,” he said. Now that the blast furnace issues are behind it, Mr Gupta said the company is continuing to work towards being carbon neutral by 2030.  

To other news, in a decision which could prompt a significant ripple effect across various industries, BHP has announced it will temporarily suspend operations at its Nickel West operations and West Musgrave project (Western Australia Nickel). The suspension will commence in October this year and should be completed by December. It will be reviewed in 2027. According to BHP, the decision to suspend operations results from an oversupply in the global nickel market. Forward consensus nickel prices over the next half of the decade have fallen sharply, reflecting strong growth of alternative low-cost nickel supply.

“Since BHP announced a review of Western Australia Nickel in February, we have explored options to stem losses in the short-term and identify a viable path forward for the business. Like others in the Australian nickel sector, we have not been able to overcome the substantial economic challenges driven by a global oversupply of nickel,” said BHP’s President Australia, Geraldine Slattery. Perth-based mining analyst, Tim Treadgold, told the ABC he could not see the nickel industry in Australia recovering from such a big player pulling out. “This is very close to being the death knell,” he said.

BHP’s decision to mothball its nickel mines and downstream infrastructure has already been noted by other miners, including Lynas Rare Earths and global mining heavyweight, Glencore. Lynas told the Australian Financial Review that the BHP suspension would hit the supply of sulphuric acid needed for its new $800 million processing plant. Sulphuric acid is a by-product of nickel smelting. BHP also supplies some of the acid needed by Glencore to run its Murrin Murrin nickel laterite mine in the region. Glencore said increasing volumes of low-cost supply from Indonesia had led to structural changes in the global nickel market and pushed prices lower. “We will continue to closely monitor the situation and our Murrin Murrin operations in the context of the current market environment,” a spokesperson said. Glencore and IGO Limited, which is a supplier to BHP, are the last nickel producers left in Australia after a string of mine closures and thousands of job losses blamed on a glut of supply from Chinese-backed producers in Indonesia. Mr Treadgold said nickel prices were notoriously difficult to predict but he expected the downward trend to continue. “We’re talking about a metal which, as recently as two years ago, was just short of $50,000 a tonne. Now it´s about $17,000 a tonne. I can’t think of another commodity that moves at that pace, and as far as it does.”

BHP said that since the fiscal year of 2020 it had invested approximately $4.4 billion to sustain Western Australia Nickel as an ongoing business and to reorient its production to the battery and electric vehicle market. Nevertheless, the company had recorded a negative cash flow every year during this period. The lower global nickel prices had contributed to Western Australia Nickel expecting to report an underlying EBITDA loss of approximately US$300 million in the financial year to 30 June 2024. BHP said that, during the temporary suspension, it will offer redeployment or redundancy to its 1,600 frontline workers at Western Australia Nickel. It will also invest approximately $450 million per annum during the suspension transition period to support a potential re-start of Western Australia Nickel. BHP also said it would establish a $20 million community fund to support the towns affected by the closures. Coolgardie shire president, Malcolm Cullen, said he did not think that would be “anywhere near enough”.

Finally, just a reminder that ASN´s companion platform AustralianSteel.com will publish a special feature titled “Sustainability” in early September. The feature will allow any company – large or small – in Australia, New Zealand and beyond to promote its green credentials. Clearly, the nature of steelmaking has to change, so it´s less of a pollutant. Likewise, the way we transport steel and use steel has a damaging effect on the environment. This must change – and, fortunately, it is. The special feature will give everybody involved in the industry the opportunity to say what they are doing to improve their processes. Readers of AustralianSteel.com and ASN will thus be able to easily identify which companies are taking the threat to our environment seriously. Any company wishing to appear in the special feature should contact our national advertising manager, Mari Groves. Her Australian mobile is: 0412255150. Her email is: [email protected]. Come on, get on board!