BHP Billiton has defended its contentious plans for a fresh $US4.7 billion ($5.9bn) investment to bring the Jansen potash project in Canada’s Saskatchewan into production, saying low prices are expected to rise as oversupply eases. The mining giant added that the project would only go ahead if strict investment hurdles were overcome.
The defence, posted to its website earlier yesterday, comes after US fertiliser giant Mosaic cast doubt on the plan’s timing and economics and as US activist fund Elliott uses the plans to open up a new front in its campaign to restructure BHP.
BHP’s principal potash analyst, Paul Burnside, said the Jansen project, where BHP has already approved $US3.8bn to access the 1km deep ore body ahead of a development decision, could support attractive shareholder returns over decades. “We’re excited to have this option in our portfolio, and there are many ways we can realise value from it,” Mr Burnside said.
“Above all else, we would only proceed if it passed our strict investment hurdles and was in the best interests of our shareholders.”
The Australian reported online earlier yesterday that Mosaic chief executive Joc O’Rourke said low potash prices meant it was a lot cheaper to buy new supply than to build it and that he was not worried about the supply coming on from BHP.