First Quantum Minerals (OTCPK: FQVLF) is shutting down the Ravensthorpe nickel mine in Western Australia.
The closure follows months of production suspension.
First Quantum's original plan to process stockpiles and consider resuming mining by 2025 has been scrapped. The company blamed ongoing financial losses and the forecast of lower nickel prices in the coming years.
The site was "incurring significant current and projected losses," a company spokesperson told the Australian Broadcasting Corp.
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Nickel prices, crucial for the profitability of such mines, have seen a significant drop due to increased production from cheaper sources in Indonesia. Nickel currently trades at $19,180 per ton, over 30% below the 2023 highs.
While Ravensthorpe Shire president Tom Major, accustomed to the cyclical nature of the mining industry, expressed cautious optimism about the community's ability to bounce back, the short-term outlook is undeniably bleak.
Meanwhile, mining analyst Tim Treadgold views the closure as a predictable outcome for a high-cost project.
"Ravensthorpe was always one of the more likely mines to close. It's surprising it kept going as long as it has," he said for ABC.
Treadgold highlighted that other nickel operations in Western Australia are also experiencing difficulties, pointing at as BHP's (NYSE:BHP) Nickel West as the next operation under pressure.
While government subsidies provide little more than a "bandaid fix," BHP's 3,000-strong workforce in the Goldfields and Kwinana region will be on alert, especially given the potential Anglo American acquisition that could see the management less likely to keep the loss-making businesses operating.
Ravensthorpe faced hardship in the past. BHP shuttered the mine in 2009, leaving 1,800 people jobless. The previous First Quantum's closure cost 450 jobs in 2017, while the current shutdown will eliminate about 330 jobs.
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