BHP’s board could have the most expensive single development approval decision in the miner’s history in front of it next financial year, in the form of a $US4.7 billion ($6.3bn) investment in the Jansen potash project in Saskatchewan.
Lost in the ramp-up of activist fund Elliott Management’s hostilities last week was the revelation that the miner is nearly ready to give approval to the first production stage of the Jansen project, where it has approved $US3.8bn to sink 1km-deep shafts to get to the big potash deposit.
The enthusiastic BHP mood around potash will create trepidation among some investors that the Elliott push to create value through an oil and gas restructure and share unification is accelerating potash development, while Canadian analysts have queried whether the global potash market can support it.
But if it does go ahead, and BHP is right in thinking the market can support production from the world’s best undeveloped potash deposit, it will be the foundation of a new Saskatoon-based BHP business unit with the potential for four other mines the same size as the huge Jansen.
“We are looking at a phased expansion into Jansen, with an initial stage of 4 million tonnes per annum, which will generate competitive returns,” BHP chief Andrew Mackenzie said last week at a presentation to a Barcelona conference on the same day Elliott stepped up its campaign to get more value from BHP.
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