Global miner BHP Billiton Ltd (BHP.AX: Quote) (BLT.L: Quote) plans to develop a large uranium mine in western Australia and is in talks to sell a nickel refinery in the country's east, newspaper reports said on Friday.

The miner plans to develop the Yeelirrie over the next two years and start mining in 2014, the Australian newspaper said, citing papers filed to the environment department. Yeelirrie is Australia's second-biggest unmined uranium deposit.

The mine is yet to be approved by BHP's board, the paper said. BHP also owns the Olympic Dam uranium mine in South Australia state, which it plans to expand.

Australia's uranium industry has been hamstrung since the early 1980s by political hostility to the nuclear fuel, but long-standing bans on new mines by various state governments are gradually being lifted in the face of economic crisis.

The national government is also encouraging more uranium mining and courting new export business in China. Australia is the world's second-largest supplier of the metal behind Canada.

Australian resources minister Martin Ferguson told state radio on Friday that the government supported new mine developments.

In my opinion Yeelirrie will go forward, subject to appropriate regulatory approvals. The demand for uranium is good, it's going to continue to grow, it's one of the commodity prices that's actually held itself up relatively, Ferguson said.

He said that Australia must be well placed to meet demand from new nuclear power plants worldwide.

Separately, the Australian Financial Review newspaper said that BHP is in talks with Australia's Gladstone Pacific Nickel to sell its Yabulu nickel refinery in Queensland state.

The paper said Gladstone does not have the capital to buy Yabulu, but is supported by local mining magnate Clive Palmer and its joint venture partner China Metallurgical Construction Corp.

The future of Yabulu has been the subject of speculation since BHP began idling nickel facilities in Australia due to falling prices for the metal.

The paper said BHP would not want to close Yabulu given cost concerns and the impact on jobs, and would prefer to sell it. (Reporting by Jonathan Standing)

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