It could be regarded as a deliberate provocation, a statement of defiance and intent. The latest addition to BHP Billiton’s “Prospects” blog will, intentionally or not, irritate the group’s activist stalker, Elliott Management and its supporters. In the blog item, BHP’s principal potash analyst, Dr Paul Burnside, makes the demand-side case for potash, promising an analysis of the supply side in a future entry.
The issue is somewhat controversial in the context of BHP and Elliott’s attempt to force its own agenda on the company. BHP has, of course, already committed $US3.8 billion to its Jansen potash project in Canada and earlier this year foreshadowed a decision as early as next year on whether to proceed with the first phase of a project that could cost a further $US8bn to $US10bn.
Despite the dramatic reductions in its capital investment once the commodity boom ended, BHP and its chief executive Andrew Mackenzie have remained enthusiastic about the long-term prospect of entering the potash market and adding a “fifth pillar” to BHP’s portfolio of iron ore, coal, copper and petroleum.
That’s despite a potash market that is in oversupply, with more new supply entering the market and prices that are a fraction of the levels that caused BHP to, unsuccessfully, bid $US40bn for Canada’s Potash Corp in 2010.
Elliott’s assault on BHP is based on its poor performance relative to its peers in the post-boom environment and focused on its ill-timed acquisition of US shale oil and gas assets.
For the rest of this article: http://www.theaustralian.com.au/business/opinion/stephen-bartholomeusz/potash-call-marks-fork-in-the-road-for-bhps-ken-mackenzie/news-story/0056baec0d9056ff7c5a15df2babdb2d