bhp view on potash

Re-post from POK thread (thanks WB)

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Interesting article on BHP and Potash..BHP obviously see's a bright future for the fertiliser base..


Aussie projects gone to potash
DateOctober 2, 2012 Read laterPeter KerinShare. Pin ItEmail articlePrint Reprints & permissions.
A mountain of processed potash at a storage facility in Canada. Photo: Reuters

SPECULATION that a potash project in Canada has leapt ahead of major Australian projects in BHP Billiton's order of preference have been reinforced by new documents released by the company.

BHP is hosting big investors at its Escondida and Spence copper mines in Chile this week and has used the occasion to release a new briefing paper on its base-metals business.

The documents discuss the future of two of the ''mega projects'' that BHP has among its expansion options: Australia's Olympic Dam, and Canada's Jansen potash expansion.

Those projects - along with the $US20 billion ($19.3 billion) Port Hedland outer-harbour expansion - were put on ice in August, when BHP finally conceded the market conditions were too tough to allow such massive spending.

Advertisement BHP has promised that no mega projects will be approved in the year to June 30, 2013, but work to improve the economics of the projects continues, and their order of viability appears to have changed from early 2012 when Jansen appeared likely to be the third cab off the rank.

Yesterday's briefing paper describes the outlook for potash as ''attractive'', and says work designing the Jansen project and obtaining government approvals was continuing apace.

The documents said BHP was ''well placed to meet growing potash demand'' and that ''final investment decision remains subject to board approval''. But the briefing paper revealed a cooler attitude towards Olympic Dam's vast deposits of copper, gold, uranium and silver, with the company declaring that ''an investment decision is far from imminent''.

Since deferring an investment decision, BHP had decided to go back to the drawing board and find cheaper alternative methods of developing the mine, and the company said yesterday those studies would need to be ''extensive''.

Just last week, BHP sought a 46-month extension to an ''indenture agreement'' with the South Australian government covering a host of approvals relating to the project. South Australia is considering the request.

The mood of the briefing paper fits with a recent observation by analysts at Macquarie, whose interactions with BHP left them convinced that Jansen was now ''leading a one-horse race'' for project approval inside BHP.

Read more: http://www.smh.com.au/business/aussie-projects-gone-to-potash-20121001-26vd7.html#ixzz286CjlpLA