BHP Billiton in talks to sell Australian nickel business

* BHP may sell all or part of Nickel West

* Nickel West valued at $459 mln - Deutsche Bank (Xetra: DBK.DE - news)

* Glencore Xstrata (Other OTC: GLCNF - news) , X2 Resources seen as potential bidders (Adds analyst comment, potential bidders)

MELBOURNE, May 14 (Reuters) - BHP Billiton (NYSE: BBL - news) is in talks to sell its Australian nickel business, the top global miner said on Wednesday, in line with its aim of simplifying the company.

The push towards a sale comes as nickel prices have surged 50 percent this year on the back of a ban on nickel ore exports from Indonesia, which has seen the value of some nickel miners nearly double.

BHP said it was examining all options for Western Australia-based Nickel West, including the sale of all or parts of the business, which includes the Mt Keith, Cliffs and Leinster mines, the Kalgoorlie smelter, Kambalda concentrator and the Kwinana refinery.

"The process of engaging with third parties has commenced," BHP spokeswoman Fiona Hadley said. "We're not going to speculate on the timing or outcomes of the review."

The company has lumped Nickel West with two other unwanted businesses, aluminium and manganese, and flagged earlier this year that one option would be to spin off all three into a separate company.

Deutsche Bank said in an April note that it valued Nickel West at $459 million, but that does not incorporate the bank's more recent nickel price forecasts following a sharp climb over the past month.

Analysts expect BHP to fetch a strong price if it does go ahead with a sale, just as it has in $6.5 billion worth of asset sales over the past two years, including its stake in the Browse LNG project and its diamonds business.

"Look at what assets BHP has sold in the last two years. They've all been at well above analysts' NPV (net present value)," Deutsche Bank analyst Paul Young said.

Glencore Xstrata CEO Ivan Glasenberg has said that Glencore would look at Nickel West. There has also been speculation that former Xstrata boss Mick Davis, leading a new mining investment firm X2 Resources, is looking at it, too.

BHP declined to comment on who or how many parties the company was talking to. Goldman Sachs (NYSE: GS-PB - news) is advising BHP on the review.

The miner is a top-tier producer of nickel, used to make stainless steel, along with Norilsk of Russia, Brazil's Vale and Glencore.

BHP has not talked about the fate of its profitable stake in the Cerro Matoso nickel mine in Colombia, the most valuable part of its nickel business.

(Reporting by Sonali Paul; Editing by Richard Pullin)