In a statement the company said the preferred option - the sale of the business - had not been "achieved on an acceptable basis"

A likely sticking point for potential buyers was the more than $A1 billion in environmental liabilities, plus the more than $1.5 billion in capital expenditure the starved business required.

Adding to that is the fact that the Kalgoorlie smelter is running below capacity and nickel prices have collapsed from 2014 highs.

BHP said it only would pursue options that maximise value for shareholders.

For now, Nickel West will remain in the BHP portfolio as a non-core asset and the company would continue to operate the business to realise its full value.

"The focus of Nickel West will remain on delivering safe and efficient production while pursuing every opportunity to maximise productivity, to reduce operating costs and increase free cashflow," Nickel West asset president Paul Harvey said.

The Nickel West assets comprise the Mt Keith, Leinster and Cliffs mines and concentrators, and the high-grade Venus discovery, the Kalgoorlie concentrator and smelter and the Kwinana refinery which employ up to 2000 people in Western Australia.

The division has been formally under review since mid-May and BHP surprised the market in August when it excluded the business from its demerger.

After firmly stating that a sale was the preferred option, all focus has been on the likely buyer.

Glencore and Jinchuan Group were thought to be the frontrunners in the sale process, which late last month BHP CEO Andrew Mackenzie said was continuing.

"It's not a good fit with either the new company or with BHP Billiton," Mackenzie said on October 27.

"And that we are seeking to sell that business in a way that will add value to our shareholders and I have no more to say at this point."

Nickel West produced 99,000 tonnes of nickel in the 2014 financial year and production is expected to fall in FY15 to 95,000t.

The division posted revenue of $US1.4 billion in the 2014 financial year, but negative earnings before interest, tax, depreciation and amortisation of $91 million.

The focus for BHP between now and the end of the year will be securing further feed for the smelter, with future concentrate supply from Western Areas and Sirius Resources up for grabs.

Both companies had been trying to use the sale to its advantage to get the best terms on offtake deals.

Shares in BHP dropped 1.7% to $A33.59.