BHP Billiton is to suspend operations at the Ravensthorpe nickel mine in West Australia after a fall in the price of the metal.
The company also plans to reduce the rate of production at a nickel mine at Mount Keith near Kalgoorlie.
Some 2100 jobs will be affected.
The price of nickel, which is used primarily in the production of stainless steel, has dropped from more than $US51,000 per tonne in May 2007 to about $US11,550 a tonne on the London Metal Exchange.
Ravensthorpe was opened officially in May 2008. It was expected to produce up to 50,000 tonnes of nickel per year at full capacity.