Feb 26 (Reuters) - The London Metal Exchange (LME) should classify its nickel contracts into "clean" and "dirty" ones to give customers more choice, Australian iron ore magnate Andrew Forrest said on Monday.

The comment by Forrest, chairman and founder of Fortescue Metals Group, is part of a push by miners and Australian lawmakers to save the country's nickel industry after prices collapsed amid a jump in cheaper supplies from Indonesia.

Nickel, a key ingredient in electric vehicle batteries, is typically produced to higher environmental and regulatory standards in Australia than in Indonesia. That has Australian producers calling for a green premium.

"If you've got dirty nickel in your battery systems, then you want to know about that because you don't want to propagate that and you want the choice to buy clean nickel if you can. So the London Metal Exchange must differentiate between clean and dirty," Forrest told Australia's national press club.

In an emailed response to Reuters, an LME spokesperson said the exchange "drives and supports the metals and mining industry on several sustainability measures to ensure transparency throughout the supply chain to consumers".

The LME, the world's biggest market for industrial metals, has linked up with German online platform Metalshub, which in 2022 developed a price index for class 1 nickel briquette premiums. Briquettes are solid forms of nickel obtained by compressing the metal's powder or flakes.

"Low-carbon nickel can already be listed on Metalshub today and the transaction data supports identification of a credible 'green premium' to the LME price," the spokesperson added.

Australia's nickel industry is shedding hundreds of jobs. Forrest's private investment arm Wyloo Metals said last month it would put its Western Australian nickel operations on care and maintenance at the end of May due to low prices. It bought those assets last year for $504 million. (Reporting by Melanie Burton; Editing by Edwina Gibbs and Jan Harvey)