There is little hope of a revival in the collapsed Australian nickel industry where BHP and others have shed thousands of jobs in the past 12 months in the face of competition from Chinese-backed producers in Indonesia, according to global mining giant Glencore.

London-listed Glencore regards keeping a lid on labour and energy costs as crucial to the survival of its Murrin Murrin mine, one of only two nickel operations still operating in Australia.

The mine employs about 1500 people, and is also the nation’s biggest source of cobalt.

Glencore chief executive Gary Nagle said Murrin Murrin was perilously close to slipping into loss-making territory, with no end in sight to Indonesia’s market dominance.

“Murrin Murrin is a terrific operation, and credit to our workforce. However, current market conditions are very challenging,” he said.

Glencore is unlikely to persevere with Murrin Murrin if forced to subsidise the operations.

BHP last month completed the suspension of its nickel operations in Western Australia that employed about 3000 people after huge losses, in a move that inflamed tensions with the Albanese government.

BHP has pledged to spend $450m a year on maintaining the assets and meeting commitments to traditional owners and affected communities pending a review scheduled for February 2027.

Aside from Murrin Murrin, there is only about two years of life left in IGO’s Nova nickel mine in WA if it continues to operate.

BHP wrote down the value of its WA nickel assets by $5.4bn pre-tax earlier this year after previously betting big on its demand as a battery ingredient.

Billionaire Andrew Forrest shut down nickel mines in WA only six months after they were purchased for $760m by his family’s private company.

Glencore expects Indonesia to dominate global nickel supply for decades after advances in the processing of its vast nickel laterite reserves.

Nickel prices have fallen from highs of more than $US30,000 a tonne to about $US15,000 a tonne since the start of 2023.

In coal, Mr Nagle walked away from a meeting with new Queensland Premier David Crisafulli hopeful the state would become more mining friendly as part of a wider policy reset needed to repair Australia’s reputation as an investment jurisdiction.

Glencore is set to emerge as the wildcard in any renewed BHP bid for Anglo American as it weighs investment options in Australia against policy headwinds.

The meeting came as Anglo narrowed the field of bidders for its Queensland coal portfolio and amid reports Glencore missed the short-list but remained interested in some of the operations.

Asked about Anglo and its assets, Mr Nagle said: “We certainly like steelmaking coal. We would buy the right mine at the right price, but even if there’s a top-tier asset we won’t overspend, and we will remain capital disciplined.

If someone wants to overspend and pay more than we think it’s worth, good luck to them.”

Glencore and BHP are both pushing for state and federal policy changes, while Rio Tinto has warned the government against going too green at the expense of the mining industry.

BHP chief executive Mike Henry declared Queensland a no-go zone for investment after shock increases in coal royalties, and suggested there were now more attractive investment opportunities in place such as Chile and Canada.

BHP and Glencore in copper and Rio in lithium are also investing heavily in Argentina, where red tape is being slashed to attract mining dollars.

Mr Nagle said Queensland’s new LNP government – which has said there will be no change in royalty rates in the next four years – had signalled that it wanted to get back on track as a destination for investment.

Glencore’s policy issues in Australia extend to the Albanese government’s industrial relations changes that have dragged it into multi-employer bargaining, and duplication and confusion around state and federal regulation of greenhouse gas emissions.

A major source of frustration in NSW is the three years Glencore and partner Yancoal have spent seeking approval to continue the Hunter Valley operations that produce high-quality thermal coal.

A significant factor has been uncertainty around the NSW policy on greenhouses gas emissions.

Glencore sees merit in NSW and other states following the lead of WA, which last month handed responsibility for emissions regulation to the federal government.

WA’s Labor government said the move was based on constitutional legal advice to the effect that state powers fell away after the Albanese government legislated the safeguard mechanism as its flagship emissions reduction policy for heavy industry.

The state has so far refused to make the legal advice public.

Mr Nagle said the application to continue mining at Hunter Valley surpassed what was required under the safeguard mechanism, and noted a less jaundiced view of coal emerging around the world.

“The current HVO continuation project proposal is better than the safeguard mechanism in terms of emissions and will contribute billions of dollars to the NSW economy and thousands of jobs, directly and indirectly,” he said.

“What we are seeing globally is that stakeholders are prepared to have a conversation about coal. They understand that the world has to advance and needs energy today at the same time as we continue to build renewables.

“Many stakeholders have told us that they are comfortable with coal as a shorter-term transition fuel.”

Anglo is trying to sell its Australian coal assets to ease financial pressures and reassure investors after rebuffing BHP’s $75m takeover tilt in May.

BHP has left the door open to making a renewed bid once a standstill period under UK takeover laws expires on November 29.

Glencore, touted as a potential rival bidder, appears prepared for BHP to return to the fray after months of speculation that many Anglo mines might fit more neatly in the Glencore portfolio.

BHP reigniting a takeover could at least open the door for Glencore to realise a long-held ambition to move into iron ore mining.

Glencore already has a strong presence in South Africa, where BHP wanted Anglo to spin off its Kumba iron ore operations under its initial takeover bid.

Glencore also owns 44 per cent of the prized Collahuasi copper mine in Chile alongside Anglo, which also has 44 per cent.

The change in sentiment on coal played into Glencore’s recent decision not to spin off its entire coal business after it was boosted by the $US7bn acquisition of Canadian mines from Teck Resources in July.

“We went to our shareholders to ask for their views and over 95 per cent of those consulted wanted to retain coal,” Mr Nagle said.

This article first appeared in The Australian.

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