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BHP in massive nickel write-down after prices collapse

(Sharecast News) - Annual profits at Australian mining giant BHP slumped after it took a massive hit on its nickel operations and the financial after-effects of the 2015 Samarco dam disaster in Brazil continued to dog the company. A glut of nickel caused by extra production from Indonesia has seen prices collapse, resulting in BHP being forced to take a $2.5bn write-down of its loss-making Western Australian operations.

Underlying profit was $6.6bn, but the nickel write-down and $3.2bn charge for the Samarco disaster, which killed 15 people after a tailings dam wall at an iron ore mine collapsed, reduced the figure to $972m.

Revenue rose 6% to $27.23bn on the back of higher metals prices elsewhere. The company is now reviewing its Australian nickel mines, smelter and refinery operations, with shuttering them a potential option.

"We have a smelter and refinery. It's a much more complex decision to look at how you move those into a period of care and maintenance and preserve the realistic ability to move them out of care and maintenance in due course," said chief executive Mike Henry.

Australian Prime Minister Anthony Albanese said the government was considering support measures for the nickel sector, including production tax credits.

However, Henry said this may not be enough "given just how significant the challenges in the nickel market are today".

"The single biggest factor is this surge in supply that's come out of Indonesia, which has taken everybody by surprise. We expect that's going to persist for a period of time, possibly through to the end of this decade."

Reporting by Frank Prenesti for Sharescast.com

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