Australian mining major BHP has reduced the number of contractors at its Kalgoorlie nickel smelter in view of the current rout in the nickel market.

This decision aligns with efforts to reduce costs as the industry faces a surplus of nickel supplies, particularly from Indonesia and China.

The company has halted progress on a new precipitation system intended for the Kalgoorlie facility, resulting in the immediate stand-down of contractors involved in the installation.

Additionally, BHP has put on hold plans to construct a temporary 1,000-bed camp designed to house workers for the smelter's anticipated rebuild in 2025–26.

According to the Australian Financial Review, BHP's application indicated a requirement of up to 2,000 workers at the peak of the smelter's refurbishment.

Despite the postponement of the precipitation system and housing projects, the Kalgoorlie smelter remains operational.

BHP is currently assessing the viability of its nickel operations, considering the possibility of deactivating the nickel business until market conditions and nickel prices show signs of improvement.

Earlier this month, BHP reduced contractor jobs at its West Musgrave nickel and copper project in Western Australia as the miner, like many others, reels from the impacts of a global nickel price crisis.

The company said it had cut approximately a quarter of the contractor staff – around 100 people – at the site.

Last month, the miner said it will close its Nickel West operations in Australia, citing "challenges" in the industry and a "deterioration" in the short and medium-term outlook for the metal.

At that time, BHP also noted that it will review business plans at its West Musgrave project.