BHP Nickel a case study in directors' duties - AUD 4.5 Billion write-down of nickel projects after "green premium" failed to materialise was entirely predictable, even Resources Minister Madeleine King understands that

 by Ganesh Sahathevan 

From the AFR, October 5 2023: 

BHP says electric vehicle manufacturers are not yet willing to pay a “green premium” to recognise the sustainability credentials of nickel mined in Australia, at a time when surprisingly large volumes of Indonesian nickel have dragged down prices for the metal to a two-year low.

BHP’s chief development officer Johan van Jaarsveld said the company would maintain a policy of only investing in the sort of “sulphide” nickel geology that occurs in Australia and Canada, but was bracing for more nickel supply growth from Indonesian miners working in “laterite” geology.

Unsurprisingly, by 15 February 2024:

BHP (ASX:BHP) has responded to the downturn in the Western nickel market by smashing the value of its Nickel West business, cutting US$3.5 billion pre-tax and US$2.5b in post tax value in a massive impairment.

The business is now worth NEGATIVE US$300m including US$900m in closure and rehabilitation provisions and BHP has flagged it could place the entirety of its Nickel West business in care and maintenance.

They employ over 2500 people across WA at BHP’s Kwinana refinery, Kalgoorlie smelter, Kambalda concentrator and Mt Keith and Leinster mines.

However it was BHP that pushed itsef out of the market: 

BHP is building the tallest wind farm in WA to slash carbon emissions from its West Nickel operations across the State.

BHP has commenced installation of 18 towering wind turbines at its Flat Rocks wind farm in WA.

The project kicked off last year with partner Enel Green Power responsible for the commissioning of the farm.

The initial 12-year agreement will see BHP use 100 per cent of the power produced at Flat Rocks to power its Nickel West operations across the State.

“Upon completion, the wind farm will generate renewable energy equivalent to the entire annual electricity consumption at our Kalgoorlie nickel smelter and Kambalda concentrator each year,” BHP Nickel West manager of energy and utilities Rob Whitham said.

BHP went ahead with its disastrous plans despite this:

China’s dominance in Indonesian nickel mining challenges the West

The Indonesians, backed by the Chinese, have no problem with coal fired power stations:

China also financed supporting infrastructure needed for nickel processing. Many coal fired power plants, on which nickel smelting depends, were set up in Indonesia through China’s “Belt and Road Initiative” (BRI).

Given the above, why would BHP's shareholders not hold their directors to account, and seek from the compensation for the loss in shareholder value?

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