UPDATE 1-BHP to suspend some operations at Australian nickel plant from June

(Adds detail on BHP, Wyloo, nickel market in paragraphs 4-7)

MELBOURNE, Jan 22 (Reuters) – BHP Group will temporarily shut part of its Kambalda nickel concentrator in Western Australia in June, the top global miner said on Monday, after Wyloo Metals, which supplies ore to the plant, announced a pause in mining due to low nickel prices.

"The decision by Wyloo to suspend its operations means it will no longer be viable to continue operating parts of the Kambalda concentrator from mid-year," BHP's Nickel West President Jessica Farrell said in a statement to Reuters.

Around 20 roles will be affected.

BHP's move was the latest in string of writedowns and restructures of nickel businesses in the country given a sharp jump in Indonesian supply which has hammered prices 40% in the past year.

Australia's top nickel producer said it would put the crushing, milling and flotation circuit at its Kambalda plant on care and maintenance but would continue to run part of the plant as a drying circuit to process third-party concentrate.

The announcement came after Wyloo, a private investment vehicle owned by iron ore billionaire Andrew Forrest, said it would put its Kambalda nickel operations on care and maintenance at the end of May as a result of weak nickel prices.

BHP, which has a deal to supply Australian nickel to Tesla , last week flagged it could take a writedown at the division that accounts for a key plank of its green energy transition strategy but less than 1% of its revenue.

"We are looking at a range of options to remain globally competitive in a very tough operating environment. Costs have risen sharply and continue to go up while prices have fallen as new supply comes into the market," Farrell said.

BHP said last week it would give more details on the options at its half-year results on Feb. 20.

It may write down the value of the West Musgrave nickel project, acquired with its $6.4 billion takeover of OZ Minerals last year, analysts said. Experts valued the project at $1.2 billion. Mine development, under way, could also be delayed.

(Reporting by Melanie Burton; Editing by Tom Hogue and Sonali Paul)

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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