BHP - Kalgoorlie

Acid Plant Database July 21, 2024

Owner	BHPBilliton - Nickel West - Kalgoorlie Nickel Smelter
Location	Kalgoorlie, Western Australia Australia
Background	Formerly Western Mining Corporation - WMC
Website	www.bhpbilliton.com
Plant	Kalgoorlie Nickel Smelter
Coordinates	30º 52' 29" S, 121º 29' 4" E
Type of Plant	Metallurgical
Gas Source	Nickel - Outokumpu Flash Smelting Furnace
Plant Capacity	2252 MTPD
SA/DA	3/1 DA Overall Conversion: 99.8%
Emissions	SO₂: 200 ppm
Status	Operating
Year Built	1996 October 2024 - Operations Suspended due to poor nickel market February 2027 - Review of suspension
Technology	MECS
Contractor	Simon Carves Australia
Equipment	Blower Supplier: KKK Delivery Year: 1995 Model: SFO 14 Quantity: 2 Flow Rate: 66.6 m3/s Pressure Rise: 667 mbar Power: 4400 kW
Remarks	- Reported cost of sulphuric acid plant: A$145 million - 2003 - Cold Heat Exchanger replaced by one Chemetics radial flow exchanger due to fouling and failure of original two parallel units (see picture)
Pictures	Old Gas-Gas HX removed during shutdown
Videos	Kalgoorlie Nickel Smelter (NKS) Area 1 orientation
General	The Kalgoorlie Nickel Smelter and Kambalda Nickel Concentrator consist of a smelter in Kalgoorlie and a concentrator in Kambalda. Opened in 1973 and located just south of Kalgoorlie, the Kalgoorlie Nickel Smelter uses a flash smelting method. Dry concentrate is transported from Kambalda and Leinster to the Smelter which produces granulated nickel matte, containing about 68 per cent nickel, 2-3 per cent copper and 1 per cent cobalt. The matte is railed to the Kwinana Nickel Refinery to produce premium nickel briquettes and to the Port of Fremantle, Perth, for export. The Kalgoorlie Nickel Smelter is currently producing 100,000-110,000 tonnes of nickel-in-matte a year. The Kambalda Nickel Concentrator, located 60 kilometres south of Kalgoorlie, processes feed from third party suppliers and the concentrate is subsequently purchased and supplied to the Kalgoorlie Smelter. The concentrator produces 35,000-40,000 tonnes of nickel-in-concentrate per annum.
References	-
News	July 11, 2024 - BHP announces that the Nickel West operations and West Musgrave project (Western Australia Nickel) will be temporarily suspended from October 2024. BHP intends to review the decision to temporarily suspend Western Australia Nickel by February 2027.The decision to temporarily suspend Western Australia Nickel follows 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.During the temporary suspension, BHP will continue to support its workforce and local communities. BHP will invest approximately US$300 million (AU$450 million) per annum following completion of a transition period to support a potential re-start of Western Australia Nickel.The transition period will commence from July 2024. Operations will be suspended in October 2024 and handover activities for temporary suspension will be completed by December 2024.During the temporary suspension, BHP will: - suspend mining and processing operations at the Kwinana nickel refinery, Kalgoorlie nickel smelter and Mt Keith and Leinster operations and the development of the West Musgrave project; - implement a care and maintenance program of work to ensure the ongoing safety and integrity of its mines and related infrastructure; - continue to invest in exploration to extend the resource life of Western Australia Nickel and preserve optionality; and - offer Western Australia Nickel frontline employees another role within BHP or the choice of a redundancy and establish a AU$20 million Community Fund to support local communities during the temporary suspension. Since FY2020 BHP has invested approximately US$3 billion (AU$4.4 billion) to sustain Western Australia Nickel as an ongoing business and to reorient its production to the battery and electric vehicle market. This includes establishing Australia’s first nickel sulphate plant to enhance downstream infrastructure, building two new mines and investing in the development of two solar farms and battery storage. Western Australia Nickel has recorded negative cash flow every year during this period.Despite the significant capital investments, lower global nickel prices have contributed to Western Australia Nickel expecting to report an underlying EBITDA loss of approximately US$300 million in the financial year to 30 June 2024.1In February 2024, BHP announced plans to review Western Australia Nickel and a non-cash impairment charge of approximately US$3.5 billion (AU$5.1 billion) pre-tax against the carrying value of Western Australia Nickel. As a result of the decision to temporarily suspend operations, BHP expects to recognise a further non-cash impairment charge of US$0.3 billion (AU$0.45 billion) pre-tax as an exceptional item in the Group’s FY2024 Financial Statements.Any redundancy payments and other contractual costs triggered by the decision to place Western Australia Nickel into temporary suspension would be recognised in the Group’s HY2025 Financial Statements.BHP’s President Australia, Geraldine Slattery said:“We understand this is a challenging period for the Western Australia Nickel team and surrounding communities. Every frontline employee will be offered another role within BHP, and best endeavours will also be made to identify redeployment opportunities for other employees engaged in the day-to-day operations of Western Australia Nickel.We will also work closely with local communities, Traditional Owners and suppliers to support a responsible transition process, which will include the establishment of a AU$20 million Community Fund.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.We have made the difficult but necessary decision to temporarily suspend the Nickel West operation and West Musgrave project.We will continue to invest approximately AU$450 million (US$300 million) per annum in the Western Australia Nickel facilities to enable a potential re-start. Western Australia remains an important investment destination for BHP globally, with investment in the State expected to be greater than AU$12 billion over the next five years and we will continue to work with all of our Western Australian partners to advance the economic prosperity of the State.” May 20, 2024 - BHP has cut contractors working on its Kalgoorlie nickel smelter and deferred plans for a 1000-bed camp to house workers needed to rebuild the ageing infrastructure, which is at risk of being mothballed. The moves come as chief executive Mike Henry vowed to clarify the future of the loss-making division “as soon as practicably possible”. Work on a new precipitation system for the Kalgoorlie smelter was halted in the past two weeks and contractors installing the project were stood down immediately. BHP’s Nickel West operation in WA. The cut is part of BHP’s efforts to rapidly lower costs. The cuts come as BHP mulls whether to mothball its entire nickel mining, refining and smelting division in Western Australia, in a year when BHP was scheduled to commit close to $1 billion in new spending to refurbish the 51-year-old smelter.BHP’s application to build a temporary 1000-bed camp to house workers needed to rebuild the smelter has been deferred, City of Kalgoorlie-Boulder records indicate. The mining giant withdrew the application before it was due to be discussed at a council meeting on February 26. The camp had been earmarked to be council owned and intended to house workers needed to rebuild the smelter in 2025-26. In lodging the application last year, BHP indicated up to 2000 workers would be needed at the peak of the rebuild, nearly six times the smelter’s residential workforce of 350.The Kalgoorlie smelter has continued to operate this week, and cessation of works on the new precipitation unit does not necessarily mean the asset is bound for closure. But the move is part of BHP’s efforts to rapidly cut costs and comes after about a quarter of the workforce at BHP’s West Musgrave nickel and copper project in WA were stood down. Mr Henry acknowledged during a shareholder briefing this week that the uncertainty over the future of the nickel division was difficult for employees, and he vowed to make a decision “as soon as practicably possible”. He said the nickel division’s unit costs were “about $US20,000 ($30,620) a tonne” well above the $US17,675 a tonne benchmark nickel price reported by the London Metal Exchange on March 18. “So just from an operating margin basis, we are in the red. That means the business is losing cash, and at the same time there is a need for ongoing investment in the business just to keep it safe and running properly,” Mr Henry said during the briefing. “On top of that we have the need for a major [Kalgoorlie] smelter rebuild coming towards us, which is many hundreds of millions of dollars in capital expenditure.“Clearly this isn’t sustainable, it is not the best use of funds for shareholders, so we have to figure out how we make this business more sustainable. Part of that is about bringing costs down, part of it is choices we make around capex [capital expenditure].” BHP said on February 15 that it was reviewing the future of the nickel division, and one option was to mothball the entire business, or “care and maintenance”, before reopening it when nickel prices improved. Mr Henry told the shareholder briefing that mothballing the entire division was not something BHP would do lightly. “That is a pretty weighty decision. There are some clear technical challenges we would need to work through to get to that being the right decision for us, and it is primarily around the smelter and the refinery,” he said. While nickel is a small contributor to BHP’s earnings, the division employs close to 3000 people and many more indirectly. BHP spent much of the period between 2010 and 2018 trying to sell the WA nickel division, but decided to keep it when it became clear that nickel demand could soar from battery manufacturers, which use the metal in the cathodes of lithium-ion batteries. A recent rally in nickel prices – from $US16,130 a tonne at the start of February to a high of $US18,165 last week – coincided with licensing delays that hit production across Indonesia. ASX-listed Nickel Industries, which is one of the world’s biggest producers from mines and processing assets in the South-East Asian nation, said miners had been unable to secure annual licences approving nickel ore sales volumes for most of the March quarter. “The delay was caused in part by enhanced regulatory approvals and scrutiny alongside the recently completed Indonesian presidential elections,” it said. Nickel Industries’ Hengjaya Mine was unable to sell ore in January and for most of February. The company restarted ore deliveries on February 21 as Indonesia cleared a backlog of more than 700 licence applications. March 4, 2024 - Pressure is mounting on Australia's government to support beleaguered battery metal producers as BHP mulls shuttering the country's only nickel smelter amid a major supply glut. Australia's leaders want to transform the resource-rich country into a key supplier of materials for green technology like electric vehicle batteries and boost its role in processing and manufacturing. But competition from lower-cost producers like China and Indonesia and bigger nations such as the U.S. is putting those dreams at risk. Indonesian producers -- backed by government support and heavy Chinese investment -- now supply more than 60% of the global nickel market, which experts expect will be in oversupply until at least the end of the decade. Meanwhile, Washington's Inflation Reduction Act (IRA) has provided almost $400 billion in industry support in the U.S. Several Australian nickel operations and lithium companies have scaled back or halted operations in recent months. In the latest push for support, the Association of Mining and Exploration Companies (AMEC) arrived in Canberra last week to lobby the government for a 10% production tax credit. The delegation was joined by Robyn Denholm, chairwoman of Tesla, whose EVs include large amounts of critical minerals. AMEC-commissioned research argues the proposed "IRA-style" tax credit for critical minerals in Australia would help cancel out the advantage enjoyed by U.S. players under their incentive scheme. It would cost the government 3.48 billion Australian dollars ($2.2 billion) through to 2035 but generate some AU$1.79 billion in additional tax revenue, according to the authors. They forecast it would also generate AU$2.4 billion of additional economic activity, mainly in mineral refining, and add some 4,220 jobs in key battery metals including nickel, lithium, vanadium and rare earths. AMEC chief executive Warren Pearce said Australia needs to "get serious" about supporting its metals producers. "Around the world, governments are making major market interventions that are distorting the market and making it difficult for Australian companies to compete," Pearce told reporters. "We've got to get serious about this now. If we don't start taking actions to support the development of these industries, we're going to lose the opportunity." The federal government last month added nickel to its critical minerals list, providing players in the sector access to cheap state-backed loans. The state government of Western Australia, where the nickel industry is located, also provided relief. Minister for Resources Madeleine King on Sunday left for a weeklong trip to meet with counterparts in Canada and the U.S. King has been advocating for a "green premium" that would see minerals priced to take into account the cost of higher environmental and social standards generally followed by Western producers. "The prices paid for our minerals need to recognise that Australian workers enjoy the best conditions and the highest safety standards," she said in a statement on Sunday. Meanwhile, BHP is mulling whether to mothball the country's only nickel smelter. The smelter is part of its Nickel West business, which BHP is considering putting into "care and maintenance," an industry term for suspending operations. Located in Kalgoorlie, the smelter turns concentrate from the mines of BHP and other producers into nickel matte, which can be further processed at the company's refinery in Kwinana. BHP wrote down the value of Nickel West by $2.5 billion last month, reducing the carrying value to negative $300 million amid a sharp slump in nickel prices. During the earnings call, BHP CEO Mike Henry said the company faced a "complex decision" given the loss-making facility's broader importance. "BHP is the only nickel player with both smelting and refining capacity," Henry said. "And that brings a different set of considerations in terms of both, as a company, our consideration of whether we do move the asset into a period of care and maintenance as we flagged to the market last week, and also for the government and the nation in terms of how Australia positions itself in the race for critical minerals supply globally." He said BHP was not asking the government to save the company's nickel operations. And while BHP is supportive of the broader industry push for help, he also doubted the effectiveness of such measures given the market surplus is forecast to continue for years. "It could be that even policies like a production tax credit won't be enough to alter course for those players who have moved their operations into care and maintenance already, or potentially for BHP," he noted. October 21, 2008 - Australia's Kalgoorlie nickel smelter has resumed full production after a shut-down for unscheduled maintenance work in the September quarter, owner BHP Billiton Ltd said on Wednesday. BHP also said its Kwinana nickel refinery, 700 km (430 miles) to the west in Western Australia state, would return to full capacity by the end of October.

MTPD - Metric Tonne per Day STPD - Short Ton per Day
MTPA - Metric Tonne per Annum STPA - Short Ton per Annum
SA - Single Absorption
DA - Double Absorption

* Coordinates can be used to locate plant on Google Earth


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