BHP to take £411 million writedowns

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 totalling $675 million (411 million pounds) 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 finalised by July 31.

Palmer, who owns iron ore deposits in Western Australia and coal interests in Queensland, is a director of Gladstone Pacific Nickel , a listed company that had planned to build a $3.65 billion nickel and cobalt refinery in the Queensland industrial port city of Gladstone.

Gladstone Pacific announced on June 30 that a memorandum of understanding for the joint development of the Gladstone refinery with China Metallurgical Construction Corp had lapsed and the project's development would be put on hold.

(Reporting by Bruce Hextall and Mark Bendeich; Editing by James Thornhill)