Potash investment reflects belief in returns: BHP chief

Potash is being discussed as a possible future pillar for the world's biggest miner BHP Billiton, chief executive Andrew Mackenzie said Sunday.

  • Published: 25/08/2013 at 03:49 PM
  • Newspaper section: news

A BHP Billiton logo is displayed on the company's headquarters in Melbourne. Potash is being discussed as a possible future pillar for the world's biggest miner BHP Billiton, chief executive Andrew Mackenzie said Sunday.

The Anglo-Australian giant last week announced it would invest US$2.6 billion in a Canadian potash project, saying the longer-term outlook for the industrial fertiliser component was "compelling".

The investment in the Jansen Potash site in Canada came as BHP announced a 29.5 percent plunge in annual net profit in the year to June, due in part to a slump in prices of its traditional commodities including iron ore.

"We're building this company's future on four, possibly five pillars: iron ore, coal, petroleum and copper and we've started to talk about potash," Mackenzie told the Australian Broadcasting Corporation's Inside Business programme.

Mackenzie said more of the company's growth capital was likely to go towards petroleum, copper and potash.

"And we'll see how we go with iron ore, but we're probably finished for a time investing in coal," he said.

The Jansen investment will allow the company to finish work on excavating and lining production shafts at the site. It is seen as underscoring BHP's efforts to diversify its portfolio as the Asia-driven mining boom slows.

Mackenzie said BHP would "take our time about pushing the button on the development of a major mine", but the company has said that Jansen is the world's best undeveloped greenfield potash site.

He said developing it would "absolutely reflect our ability to afford it, but more importantly, the ability to earn very strong returns for our shareholders".

"But let me be clear -- we are continuing on this investment because we strongly believe... this is going to offer very high returns to our shareholders in the decades to come," he said.

Mackenzie said potash would not necessarily overtake the company's other pillars.

"But we would only be doing this type of investment, we'll only continue with that if we see that it can grow in scale over, you know, decades, to match the kind of scale we have now in things like copper and iron ore," he said.

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