BHP Billiton Takes $350 Million Hit From Nickel West Costs

BHP Billiton said yesterday it was likely to book an after-tax impairment of $200 million to $350 million in its February half-year financial statement as the result of “operational decisions” made after the Nickel West sale process was pulled last November.

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It is understood BHP’s sudden decision to suspend development work at its high-grade Venus nickel project and cancel some improvement works at the Kwinana refinery will be factored in to the impairment. The company is also likely to write down the value of its Leinster operations to factor in the 2013 closure of its Perseverance underground mine on safety grounds.

Including the latest impairments, BHP has now written off more than $5.5 billion from the value of Nickel West since the global financial crisis crunched nickel prices in 2008, or about $4 billion on an after-tax basis. Nickel West was the centerpiece of BHP’s $9.2 billion acquisition of WMC in 2005.

The Indian nickel cash price rose 1.8% on Wednesday, January 21, making it the day’s biggest mover. After two days of falling prices, it closed at INR 916.90 ($14.87) per kilogram. On the LME, the nickel 3-month price inched up 1.2% to $14,595 per metric ton. On the LME, the spot price of nickel rose 1.1% to $14,535 per metric ton.

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Chinese stainless steel closed mixed yesterday. The price of Chinese ferro-chrome was unchanged at CNY 10,950 ($1,762) per metric ton. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 87,000 ($14,000) per metric ton.

After a 1.1% increase, the price of Chinese primary nickel finished the day at CNY 109,200 ($17,572) per metric ton. The Allegheny Ludlum 316 stainless surcharge saw little movement at $1.01 per pound. The price of Chinese 316 stainless coil saw essentially no change for the fifth day in a row, remaining around CNY 23,700 ($3,814) per metric ton. For the fifth day in a row, the price of Chinese 304 stainless coil remained essentially flat at CNY 16,700 ($2,687) per metric ton. The price of Chinese 316 stainless steel scrap continues hovering around CNY 12,950 ($2,084) per metric ton for the fifth day in a row.

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