Mining and Heavy Industries

BHP potash play could be worth $6.3bn

A planned investment in a massive potash project in Saskatchewan, Canada, could mean an investment of as much as US$4.7 billion (A$6.3 billion), and may be approved this financial year.

In a speech last week as part of efforts to fend off investor Elliot Management’s bid for a major restructure of the mining giant, BHP Billiton boss Andrew Mackenzie referenced plans for “a phased expansion” of its Jansen potash project.

“We are looking at a phased expansion into Jansen, with an initial stage of 4 million tonnes per annum, which will generate competitive returns,” Mackenzie was quoted by The Australian. “It could be something that we seek board approval of as early as June next year.”

A $6.3 billion investment would be the largest single investment made by BHP Billiton, outside of major acquisitions.

BHP believes the supply side of the potash market favours its major holdings in Canada, with four other deposits as large as Jansen in Saskatchewan alone.

“There are a limited number of players able to bring on additional capacity,” the miner said early in May.

In his speech, Mackenzie said the phased expansion of Jansen would generate competitive returns in its first stage, and subsequent expansions would provide “significant potential upside”.

Overall, BHP believes its Saskatchewan holdings could generate as much as 60 million tonnes of potash per annum for the next 100 years.

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