MELBOURNE, July 21 (Reuters) - BHP Group ( BHP ) has

opted to sell its interest in the $2.5 billion Kabanga nickel

project in Tanzania to its partner Lifezone Metals ( LZM ) for

as much as $83 million, Lifezone said.

The NYSE-listed company will acquire BHP's 17% equity

interest in Kabanga Nickel Limited (KNL), the majority owner of

the Kabanga Nickel Project in northwestern Tanzania, Lifezone

said in a filing late on Friday.

The company issued a report on Friday that put development

costs for the project at $2.49 billion. It is expected to

produce around 50,000 metric tons of nickel annually once fully

ramped up, a process that will take six years including

construction. A final investment decision on the project is due

next year.

BHP had agreed in 2022 to make an investment of as much as

$100 million in the nickel mine and processing facilities if

certain conditions were met.

BHP did not respond immediately to a request for comment on

why it had sold its stake in the project.

The divestment comes as BHP has since shifted its view on

nickel on the back of a boom in output from Indonesia in recent

years. It put its Australian Nickel West operations on care and

maintenance last year due to a poor outlook for nickel prices

and a decision on the future of those operations is due by early

2027.

As a result the transaction, Lifezone now owns 100% of KNL,

which in turn holds an 84% interest in Tembo Nickel Corporation

Limited (TNCL), the Tanzanian operating company for the Kabanga

Nickel Project.

The remaining 16% of TNCL is held by Tanzania's government.

All existing agreements with BHP have been terminated and

Lifezone has also assumed full control of 100% of the offtake

from the Kabanga Nickel Project, it said.