* Majority China-owned project to yield 31,150 tonnes of nickel/yr
* Environmental appeal not affecting commissioning - Highlands
* Highlands expects decision on appeal in 2012 (Adds details, share price)
SYDNEY, Dec 20 (Reuters) - The $1.5 billion Ramu nickel project, China's single-largest mining investment in Papua New Guinea, should be operating close to maximum capacity by mid- to late-2013, Australian minority partner Highlands Pacific said on Tuesday.
The project, the first of its kind for Papua New Guinea, is under development to yield 31,150 tonnes of nickel and 3,300 tonnes of cobalt a year for at least 20 years, but has faced a series of setbacks and environmental protests.
Highlands said commissioning activities were underway after review of the project by PNG's chief inspector of mines and that a beneficiation plant and 136-km pipeline to transport slurry had been tested several times using water.
The mine has been plagued by local protests over plans to dump 100 million tonnes of waste 400m offshore.
A court ruling in Papua New Guinea has already approved the dumping, but an appeal against the decision is still pending.
Highlands said a ruling on the appeal was expected early next year and was not affecting commissioning work.
Highlands holds an 8.56 percent stake in the project. Metallurgical Corp of China leads a Chinese consortium that owns 85 percent, with the rest held by the Papua New Guinea government.
Highlands shares closed down 3.5 percent, outpacing losses of 0.2 percent in the broader market .
The nickel is earmarked for use as an anti-corrosive in stainless steel making in China. (Reporting by James Regan; Editing by Lincoln Feast)