BHP to take $675 million hit

SYDNEY (Reuters) - BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research), the world's biggest miner, retreated further from high-cost nickel operations on Friday, announcing the sale of its Yabulu nickel refinery in Australia to a local mining magnate.

The future of Yabulu, in the northeast Queensland state, had been in doubt after BHP Billiton in January shut its Ravensthorpe laterite nickel mine in Western Australia that supplied the refinery with concentrate to process into nickel and cobalt.

Neither BHP Billiton nor the buyer, billionaire Clive Palmer, disclosed the sale price but it will result in writedowns totaling $675 million for BHP Billiton.

"This world class plant is efficient and still has the opportunity to be expanded," Palmer said in a statement, adding that Yabulu was still profitable despite weaker nickel prices.

Ravensthorpe's closure, due to plunging nickel prices as the global financial crisis worsened, saw Yabulu's production cut back to 35,000 tonnes a year from 75,000 tonnes, making the refinery too small for a group the size of BHP Billiton.

BHP spent $2.2 billion developing Ravensthorpe but the mine operated for little more than a year.

Nickel sells for around $16,450 a tonne, compared with record highs above $51,000 a tonne two years ago.

Palmer, who made his fortune in the 1980s out of a property boom on Queensland's Gold Coast, plans to keep running Yabulu on nickel laterite ore from mines in New Caledonia, Indonesia and the Philippines.

BHP said it would write down the value of Yabulu assets by $500 million and write off a further $175 million in unrecoverable tax benefits. The sale is expected to be finalized by July 31.