Australian mining company BHP has announced that it will record a $5.7bn impairment in the company’s financial results for the half year ended December 2023 (HY24).

According to a company statement, the miner will recognise a non-cash impairment charge of nearly $2.5bn (post tax) for its Western Australia Nickel business and an additional $3.2bn write-down with regard to Samarco dam failure in Brazil in 2015.

BHP is set to release its HY24 results on 20 February 2024. The results are subject to BHP’s external auditor review and final review and approval by the BHP Board.

Last month, in an operational review, BHP highlighted challenges in the nickel industry as increased supplies from Indonesia led to a fall in prices.

The company conducted a value assessment of Western Australia Nickel, as the impairment reduced the carrying value of the business unit’s net operating assets to negative $300m.

BHP is working to optimise the operations at Nickel West and evaluating development plans for Western Australia Nickel to preserve cash. This may include putting Nickel West into a period of care and maintenance.

BHP CEO Mike Henry said: “This is an uncertain time for the Western Australia nickel industry and we are taking action to address the current market conditions. We are reducing operating costs at Western Australia Nickel and reviewing our capital plans for Nickel West and West Musgrave.”

Last month, the Federal Court of Brazil ordered BHP and its partners to pay BRL47.6bn ($9.7bn) in damages over the Samarco-operated Fundão tailings dam failure in 2015.

According to BHP, the $3.2bn impairment will increase BHP Brasil’s provision for the Samarco dam failure to $6.5bn.

The company added that BHP Brasil will continue to support the extensive ongoing remediation and compensation efforts through the Renova Foundation.

As of December 2023, the Renova Foundation has spent nearly $7.2bn on reparation and compensation programmes.

Henry added: “BHP Brasil along with Samarco and Vale continue to progress negotiations towards a settlement of the Federal Public Prosecutor Office Claim and Framework Agreement obligations in Brazil. The Renova Foundation has made good progress on reparation and compensation programmes and over 84% of the community resettlement cases have been completed.”