BHP considers shutting WA nickel operations, putting thousands of ...

BHP operates Australia's only nickel smelter in Kalgoorlie and a refinery in Kwinana, and some 2500 jobs could be lost as the mining giant figures out how to deal with a drop in nickel prices.

"We should all be worried about the future for our nickel industry," Western Australia Premier Roger Cook said.

"This is an uncertain time for the Western Australian nickel industry and we are taking action to address the current market conditions," he said.

Conditions include a sharp fall in prices as the market is flooded with nickel from Indonesia.

Resources analyst Peter Strachan said BHP may decide their best option is to shut down nickel operations in the state.

"[BHP would consider] we can't keep on going and making a loss every year, it's going to be two years before it can be profitable, so we better off to close it down, take that hit, and then keep it under care and maintenance," Strachan told 9News.

The premier said he had been speaking with federal Resources Minister Madeleine King on almost a daily basis as he looks at all options to support the industry, including royalty relief and royalty rebates.

"We understand that this is a stressful time for mine workers," Cook said.

The opposition said the worst case scenario would be disastrous for the state.

"If the nickel refinery shuts down, that marks the end of any aspiration for manufacture of lithium batteries in Western Australia," opposition spokesperson David Honey said.

"This is an absolute disgrace."