From the Herald. Folks with long memories may recall that BHP...

From the Herald. Folks with long memories may recall that BHP SOLD Australia's largest fertiliser manufacturing operation five years ago.


BHP feeds into fertiliser plans

* Barry Fitzgerald
* May 14, 2008
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BHP Billiton has stepped up its investment in agricultural fertilisers in line with its view that the rampant industrialisation and urbanisation of China and India will increase global demand for food as much as it does for iron ore, coking coal and energy.

The feed-the-world strategy was first put in place by former BHP managing director Chip Goodyear and was a spin-off from the mining group's intense study into demand patterns for commodities in the wake of the China boom, with India bringing up the rear.

BHP identified that improved living standards in the world's most populous nations would lead to the need for better yields in global crops and took huge exploration positions in Canada for potash (potassium). It has now bolstered that position by agreeing to take over its junior partner in the Canadian potash push, Anglo Potash, at a price of $C8.15 a share, or for a total of $C284 million ($A298 million).

The takeover bid for Anglo Potash represented a 34% premium on its share price immediately before the bid, reflecting the surge in prices for all types of fertilisers in response to fears of shortages in staples such as rice and rising biofuels production.

Anglo Potash's board has recommended the offer and its directors have undertaken to deliver the 26% of the company they control into the offer.

Anglo Potash's only asset is its 25% interest in the Canadian potash joint-venture development project in which BHP has a 75% interest.

BHP said its Canadian potash position consisted of a "world-class development with more than 7338 square kilometres of highly prospective exploration permits in the immediate vicinity of existing major Saskatchewan potash mines".

It said the deal was consistent with its strategy of "capturing and developing premium growth options in long-life, low-cost natural resources with a focus on delivering shareholder and stakeholder value".

The potash (mineral and chemical salts that contain potassium) industry is a new one for BHP. Potassium is abundant in the earth's crust but economic deposits are rare. Canada is the biggest supplier, with Saskatchewan home to more than half of global potash reserves.

China is now the world's biggest consumer of potash, followed by the US, Brazil and India. Almost 95% of global potash production is used in the agricultural industry as fertiliser. Potassium is essential for plant growth.