BHP applies to dig new nickel mines in Western Australia

FILE PHOTO: Australian mining company BHP's new corporate logo, released to Reuters from their Melbourne, Australia, headquarters May 15, 2017. BHP/Handout via REUTERS/File Photo

SYDNEY (Reuters) - BHP Billiton is seeking environmental approval to dig two new mines to extend the life of its Nickel West unit in the state of Western Australia, which is facing a shortfall in ore supply.

Nickel West, which produces about 5 percent of the world’s nickel metal, has lodged an application with the Environmental Protection Authority of Western Australia to clear 842 hectares (2,080 acres) for two open pit mines, according to the authority’s website.

BHP has earmarked about $2 million per month during 2016 and 2017 for making improvements at Nickel West.

Nickel West gets much of the concentrated ore it uses to feed its 100,000 tonnes-per-year Kalgoorlie nickel smelter from its nearby Mount Keith mines and has also contracted with other miners operating in the region for additional feed.

“At the current rate of production, the resource supporting Mount Keith will need to be sustained from other ore sources at some stage over the next five years,” BHP said in a statement emailed to Reuters on Wednesday.

“Securing environmental approval for the proposed Mount Keith Satellite Project will help to ensure Nickel West has a strong future and will continue to make a significant economic contribution,” the company said.

Nickel prices have fallen nearly 70 percent in the past six years due to a global supply glut.

BHP booked a $1.25 billion after-tax impairment on Nickel West in 2013. A year later, following an unsuccessful sales process, BHP took Nickel West off the auction block.

Reporting by James Regan; Editing by Christian Schmollinger