Is Western Australia's once-booming nickel industry dead or just a sleeping giant?

Thousands of job losses this year marked the bleakest period in the local industry's history, which dates back to the 1960s.

In those days, the discovery of nickel literally put the Goldfields town of Kambalda on the map, leading to the development of the country's first nickel mine while the Vietnam War drove demand for this key ingredient of stainless steel.

Today, cheaper nickel out of Indonesia has fundamentally changed the game, flooding global markets and resulting in at least 10 mine closures across WA — from the Savannah mine in the Kimberley to the Ravensthorpe mine on the south coast.

BHP's Kwinana nickel refinery and Kalgoorlie nickel smelter, which had operated continuously since 1973, were among the casualties.

It means Glencore's Murrin Murrin operation, developed by billionaire Andrew Forrest in the late 1990s, will be the only WA nickel mine left standing once the Nova nickel-copper mine runs out of reserves in 2027.

While the WA nickel industry is on life support it still has a pulse, according to CRU Group principal analyst Angela Durrant.

She expects nickel to remain in oversupply until at least 2029.

"I certainly wouldn't like to be a person who would say the industry is dead," she said.

Long road to recovery

Nickel's fastest-growing application is lithium-ion batteries, such as those used in electric vehicles, with global efforts to decarbonise expected to see demand increase.

Taking that long-term view is NiCo Resources managing director Jonathan Shellabear.

NiCo's proposed $2.9 billion Wingellina nickel-cobalt mine, near WA's border with the Northern Territory, has just been awarded major project status by the federal government.

Mr Shellabear said it reflected the project's national significance and will streamline the approvals process, though an investment decision is still years away.

"It's a tough market. The dynamics have shifted significantly in the last two years with production coming out of Indonesia and Western world production at a 30-year low," he said.

"The market will need to reset itself, and we'll need a price significantly higher to attract new investment into an industry which is required as part of the world's energy transition."

Central Australia in limbo

Mining giant BHP halted construction of its $1.7 billion West Musgrave nickel-copper project — about 100km from Wingellina — when it was 30 per cent complete as part of its decision to mothball its Nickel West division.

It was a blow for a remote region where there are few job prospects, and the Big Australian will not review its nickel business again until 2027.

It is hoped the sealing of the Outback Way — a 2,719km dirt highway stretching from Laverton in WA's northern Goldfields to Winton in Queensland — will make projects like West Musgrave and Wingellina more economically viable.

But the highway is not due for completion until 2032.

"We do suffer from a tyranny of distance," Mr Shellabear said.

"But that problem will abate over the next few years and Wingellina will definitely have its day in the sun, there's no doubt about that."

Waiting game for miners

Wingellina was the third nickel project in WA's Goldfields region to receive major project status in recent times, following Ardea Resources' $3 billion Kalgoorlie Nickel Project in March 2022 and Alliance Nickel's $1.6 billion NiWest project in May.

NiWest is 40km south of Murrin Murrin and its proponents, Perth-based Alliance Nickel, are in talks with potential partners, including automaker Stellantis and battery manufacturer Samsung, to help fund the project after the completion of a two-year definitive feasibility study.

Alliance Nickel's CEO Paul Kopejtka said it is now a waiting game for nickel miners.

"The softening of the electric vehicle market over the past 12 months has had a lot to do with why the commodity has come off," he said.

"Just as quickly as it came off, a turnaround in EV take-up could have a direct impact on nickel.

"The green transition will continue. There are some green shoots for EVs in the US and Europe and I think nickel will find its place again."

He said strategic partners are desperate for "what we call IRA-compliant nickel, green nickel", which opens up access to funding via the US Inflation Reduction Act.

Push for green nickel

Since Andrew Forrest's Wyloo Metals put its Kambalda nickel operations on care and maintenance in May, less than a year after paying $760 million to acquire them, the company has led a push towards so-called green nickel.

Wyloo has partnered with London-based software firm Metalshub which has designed platforms to sell commodities online.

Wyloo CEO Luca Giacovazzi said the collaboration would set a new global standard for nickel products enabling miners to provide provenance, and carbon footprint and ESG (environmental, social, and governance) information to customers in an auditable form.

But at this stage, nickel analyst Angela Durrant said the push towards green nickel is "not changing the dial that much" when cheaper nickel is available elsewhere.

She also noted during recent trips to Indonesia that it is working to improve its ESG credentials, which could further dent hopes of resurrecting WA's nickel industry.

"Projects will see the light of day if they can prove they are economically viable," she said.

"But they have to be cost effective, sound projects."