BHP offloads Yabulu nickel factory

BHP Billiton Ltd will sell its Yabulu nickel refinery in Queensland for an undisclosed sum and will book $US675 million ($A853.57 million) in writedowns on the sale.

BHP Billiton will writedown the carrying value of Yabulu by an estimated $US500 million ($A632.27 million) and by a further $US175 million ($A221.29 million) of unrecoverable tax benefits.

The writedowns will be reported as exceptional items in its 2008/09 results.

The refinery is being sold to companies wholly owned by Professor Clive Palmer and is due to be finalised by the end of this month, BHP Billiton said in a statement on Friday.

"The terms of the sale are confidential, however both BHP Billiton and Professor Palmer have sought to provide that, at sale completion, working capital and access to funds are sufficient to enable the business to commence as a going concern under Professor Palmer's ownership," it added.

Prof Palmer is the founder and executive chairman of Mineralogy Pty Ltd and has been a key figure in the Australian resources industry for more than 25 years.

"We are pleased that BHP Billiton and Professor Palmer have reached this agreement, which provides greater certainty to the workforce and the surrounding community," BHP Billiton head of stainless steel materials said.

"Professor Palmer is deeply committed to the continued operation of Yabulu and we wish him and all those working at Yabulu every success for the future.

"Communications with our workforce, suppliers, customers and the community will begin immediately and will continue over the coming weeks to facilitate a smooth transition to the new owner."

Mr Wilson said the transaction was supported by the Queensland state government, which had affirmed the continued operation of the refinery was important to the state and that there would be no change in licensing or other arrangements from that currently prevailing.

Prof Palmer saw off competition from other overseas and Australian bidders to secure the refinery near Townsville through his private businesses, Nickel House Pty Ltd, Nickel Process Pty Ltd and Nickel Consolidated Pty Ltd.

The refinery, which has a replacement value of $2 billion, is regarded as a vital component of the region's economy and has operated for more than 35 years.

"We are delighted to be able to secure the future of the Yabulu Nickel Refinery, one of Queensland's largest industrial complexes," Prof Palmer said in a statement.

"While many companies are facing economic uncertainty we are seeing many good opportunities.

"This acquisition is a good strategic fit into our nickel asset portfolio with future expansion opportunities.

"Despite nickel prices being down Yabulu is still profitable."

Prof Palmer said the 940 staff at the plant may be increased in the future.