New York hedge fund Elliott Management says BHP Billiton’s plans to approve a $US4.7 billion ($6bn) potash project in Saskatchewan are alarming, with the activist fund querying whether potash could be “the next shale”.
“This sounds alarmingly familiar and comes as the company proclaims the dubious strategy of ‘Thinking Big’ — a concept that has been disastrous for BHP shareholders,” an Elliott spokesman said. “We share the deep concerns raised by analysts and shareholders that expanding into potash could be a severe strategic misstep,” Elliott said, without naming the analysts or shareholders.
“Think Big” is the slogan BHP has used in a $10 million ad campaign in recent months that has dropped the Billiton name for marketing purposes.
Elliott, which says it has a 4 per cent interest in BHP’s London-listed shares but has not provided evidence of how this is held, has been waging a campaign to dissolve the miner’s dual-listing and sell US shale assets, saying the company has underperformed over the past decade.
This is the first time the fund has targeted BHP’s Jansen potash project in Saskatchewan, where BHP has approved $US3.8bn of spending to sink a 1km shaft to get to the deposit.