(Bloomberg) — BHP Group Ltd. is considering options for its Australian nickel operation to mitigate the impact of a sharp fall in prices and warned it could be forced to write down the value of the assets, the latest sign of trouble in the green metals sector.

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The world’s largest miner said it was assessing market conditions for the key battery material and will update investors next month, along with half-year results.

“The nickel industry is undergoing a number of structural changes and is at a cyclical low in realized pricing,” BHP said in Thursday’s statement. “Nickel West is not immune to these challenges.”

Nickel prices dropped 45% last year, weighed down by a flood of cheap supply from Indonesia, where new techniques to produce battery-grade material are threatening to disrupt the industry. BHP’s warning adds to a string of similar announcements from other companies, as smaller miners struggle to raise money from more traditional sources and grapple with rising costs.

Earlier this week, First Quantum Minerals Ltd. said it would halt mining at its nickel and cobalt operation in Western Australia and cut a third of the workforce in response to weaker metal prices and higher costs. The metal is used to make stainless steel and EV batteries.

Read More: Battery Metal Price Plunge Is Closing Mines and Killing Deals

BHP produced 19,600 tons of nickel in the final three months of 2023, up 11% from the year before, it said in Thursday’s statement. The company’s Nickel West operations include three mines, a smelter in Kalgoorlie, its Kwinana refinery and a sulphate plant.

Under Chief Executive Officer Mike Henry, BHP has reshaped its portfolio by exiting oil and gas, selling coal assets and completing the $6 billion takeover of OZ Minerals Ltd. to add more exposure to copper. Demand for that metal is forecast to surge as the world decarbonizes due to its use in power grids and electric vehicles.

A potential writedown of Nickel West would not be overly material to BHP as the metal forms a “a very small part of their overall business portfolio,” Barrenjoey resources analyst Glyn Lawcock said in a phone interview.

“By nature we’re in a cyclical industry — today, it feels like nickel’s not the place I want to have money tied up and invested in,” said Lawcock, who added that the massive surplus of Indonesian supply had caught the market by surprise.

Mainstay Product

Even as Henry shifts focus to energy-transition materials, iron ore remains BHP’s mainstay product. The company’s output of the steelmaking material in the three-month period was 65.8 million tons, down 2% from the year before.

Chinese demand for steel has plateaued and production is on track to peak before the end of the decade, dented by a years-long crisis in the nation’s property sector, which has typically consumed more than a third of the country’s steel output. While there’s some growth in smaller segments like manufacturing of electric cars and air conditioners, the pace of construction has slowed, meaning the nation’s iron ore imports are forecast to decline.

Earlier this week, BHP’s rival Rio Tinto Group reported output of iron ore for the three months to Dec. 31 fell 2% to 87.5 million tons.

Meanwhile, BHP’s copper production rose 3% in the three months, while metallurgical coal slumped 18%. Production guidance ranges for the fiscal year remained unchanged for all assets, with the exception of coking coal which was lowered. In October, BHP agreed to sell two Australian coking coal operations to Whitehaven Coal Ltd. for at least $3.2 billion.

Operations at BHP’s Saraji coking coal mine were suspended on Jan. 15 after a worker fatality and are expected to progressively restart over the coming days, it said Thursday.

BHP’s shares in Sydney fell as much as 2.2% before trading 1.3% lower to A$45.985 apiece at 1:20 p.m. local time on Thursday.

(Updates with Nickel West project details in 6th paragraph, analyst comments in 8th)

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