Nickel | BHP's Nickel Suspensions in Australia to Delay two New Trading Platforms

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Nickel | BHP's Nickel Suspensions in Australia to Delay two New Trading Platforms

Date：2024-09-23

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Keyword tags： Nickel Australia

Recent media reports indicate that the suspension of BHP's nickel production facilities and projects in West Australia has led to delays for two new nickel trading platforms supported by the company—Global Commodities Holdings and Abaxx Technologies.

These platforms, backed by BHP, were originally planned to compete with the London Metal Exchange (LME). Following the LME's nickel market collapse in March 2022, which saw prices skyrocket to over $100,000 per ton before plummeting, the LME's nickel trading platform has been largely abandoned by nickel consumers and producers. The delay in the launch of BHP's new trading platforms provides a reprieve for LME, the 147-year-old exchange.

Global Commodities Holdings Limited (GCHL), based in the UK, announced plans to launch a physical nickel trading platform just months after the 2022 financial crisis caused by the LME. Abaxx Technologies, on the other hand, announced plans last year to introduce the world's first nickel sulfate contract, used for manufacturing electric vehicle batteries. Both platforms have received support from BHP, the world's largest listed mining company.

BHP had previously stated that the LME nickel market does not reflect the physical market and is overdue for reform. The launch of these new trading platforms was intended to effectively compete with the LME. However, both platforms were reliant on BHP's nickel production volumes.

In July of this year, BHP decided to suspend operations at its nickel production facilities and projects in Western Australia from October 2024, including the Kwinana nickel refinery, Kalgoorlie nickel smelter, and mining and processing operations at Mt Keith and Leinster, as well as the development of the West Musgrave project. The suspension is set to last until February 2027. BHP cited oversupply in the nickel market and falling prices, primarily due to increasing inventories in LME-registered warehouses since August 2023, as the reasons for the suspension.

GCHL confirmed that BHP's decision to halt nickel production in Western Australia disrupted the launch of the new nickel trading platform. Nevertheless, the underlying standard contract is complete and fully operational. Abaxx began trading liquefied natural gas (LNG) and carbon futures in June but postponed the launch of the nickel sulfate contract. The company stated that significant shifts in the nickel market have affected the contract design.

Public market data shows that this year, approximately 3.5 million tons of nickel are supplied globally, with over 50% coming from Indonesia, mainly produced by Chinese companies. Western countries have often criticized Indonesia's nickel production due to environmental concerns. GCHL stated plans to open the trading platform to nickel from other "non-sanctioned" sources.

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