BHP Billiton may attract US$2B investment from fertilizer makers, sovereign wealth funds in Canadian potash project, Deutsche Bank says; sale of 25% stake could garner investments from fertilizer producers in China, India, US, South America

Andrew Rogers

NEW YORK , November 26, 2012 (Bloomberg LP) – BHP Billiton Ltd., the world’s biggest mining company, may attract investment of $2 billion from fertilizer makers as well as sovereign wealth funds in its Canadian potash project, according to Deutsche Bank AG.

“Bringing in one or more partners would reduce the capital outlay for shareholders and guarantee long term sales volumes,” Deutsche analysts Grant Sporre, Paul Young and Rob Clifford wrote in a report today. The sale of a 25 percent stake could attract investment from fertilizer producers in China, India, U.S. and South America, they said.

BHP Chief Executive Officer Marius Kloppers delayed a development decision on the Jansen mine in August as part of decision to shelve all major project approvals this fiscal year. Jansen is valued at $7.3 billion by Deutsche Bank and would be the Melbourne-based company’s first foray into mining of the crop nutrient.

First production from the project in Saskatchewan may start in 2017 and reach capacity of 8 million metric tons annually by 2024, Deutsche Bank said, estimating the cost of development at $5 billion to $6 billion. An expanded operation to 16 million tons of production would cost a total of about $15 billion, the analysts wrote.

BHP is continuing preparatory work at the site including developing two underground shafts to extract the material, Kloppers said in August. The company is still correct to target potash as a “key commodity,” Kloppers told reporters Aug. 22.

While it produces commodities including iron ore and copper, the company doesn’t yet mine potash, a form of potassium used to strengthen roots and help plants resist drought. BHP’s $40 billion hostile bid for Potash Corp. of Saskatchewan Inc., the world’s biggest producer, was blocked in 2010 by the Canadian government.

Saskatchewan is the world’s biggest potash-producing region.



--Editors: Ana Monteiro, Tony Barrett

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

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