Jinchuan Group, China's largest nickel producer by output, is a bidder for Anglo-Australian miner BHP Billiton Ltd. (BHP)'s Ravensthorpe nickel mine in Western Australia, a person familiar with the matter said Tuesday.

The person declined to provide further details on the bid, citing "complications and sensitiveness involved."

A mining industry source in Australia Monday said BHP has already closed the first round of bidding for its idled Ravensthorpe nickel mine in Western Australia.

BHP has been conducting a review since mid-year of the nickel laterite mine, which cost the company $2.1 billion to build but was closed a few months after it was commissioned last year.

The mine struggled with operational troubles, as have many other laterite projects that have high ore processing costs and have remained below expected capacity.

Previous reports have named Australian nickel miner Minara Resources Ltd. (MRE.AU), which already operates a laterite mine in Australia, as another potential bidder, in addition to the Jinchuan Group.

Australian mining magnate Clive Palmer, who in July bought BHP's Yabulu nickel refinery, has also been named in the Australian press as a potential bidder.

BHP has written down the value of Ravensthorpe to zero, and it's not clear what sale price, if any, BHP would be asking, analysts said.

"BHP will be interested in offloading liabilities associated with the operation, such as the clean up. As we think has been the case for Yabulu, it's likely that very little cash would be changing hands," said UBS analyst Glyn Lawcock.

BHP faced a fierce backlash from the local community of Ravensthorpe after it shut the plant.

"BHP will want to make sure they let Ravensthorpe go to someone who can work the operation ok. They won't want to give it to someone where the deal ends up backfiring. They still feel ultimately responsible," said Lawcock.

The Yabulu refinery in Queensland had been modified to take feed from Ravensthorpe, which was set to produce 50,000 metric tons of nickel annually.

The sale process is likely to conclude by the end of the year, and so far has received plenty of "competitive tension," the mining industry source said Monday.

BHP declined to comment on the bidding process, and repeated earlier statements that it's considering all options for Ravensthorpe, including divestment.

Ravensthorpe's biggest struggle was a build of calcine from using salt water in the processing plant, requiring the plant to be shut down "probably every month," said Lawcock.

He estimated the cost of retrofitting the plant with alternative processing technology would be around $1 billion.

-Yue Li in Shanghai and Elisabeth Behrmann in Sydney contributed to this article; Dow Jones Newswires; (8621) 6120 1200; yue.li@dowjones.com
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