Cana­dian po­tash ven­ture un­der fire

The Star Early Edition - - COMPANIES & NEWS -

BHP BIL­LI­TON’S plan to en­ter the po­tash mar­ket with a con­tentious $13 bil­lion (R169.22bn) project in Canada is adding to chal­lenges fac­ing the in­com­ing chair­per­son of the world big­gest min­ing com­pany. Ken MacKen­zie, a 53-year-old board mem­ber who takes up the role in Septem­ber, cur­rently is on a global tour to meet in­vestors in the wake of an ac­tivist cam­paign in re­cent months spear­headed by El­liott Man­age­ment. Is­sues of con­cern for some share­hold­ers in­clude the pro­ducer’s US on­shore oil and gas as­sets and its plans to ac­cel­er­ate the Jansen po­tash ven­ture. Pro­ceed­ing with Jansen risks a “se­vere strate­gic mis­step,” ac­cord­ing to San­ford C Bern­stein an­a­lyst Paul Gait, as the new sup­ply would risk de­press­ing prices by de­lay­ing to about 2036 the abil­ity of the po­tash mar­ket to work through over­ca­pac­ity. Paul Singer’s El­liott went pub­lic in April with a cam­paign seek­ing as­set sales and a cor­po­rate over­haul, claim­ing man­age­ment de­ci­sions have eroded as much as $40bn in value. “Po­tash is go­ing to be a big, big de­ci­sion and I get the feel­ing most peo­ple in the mar­ket are fairly cau­tious,” said Andy Forster, se­nior in­vest­ment of­fi­cer at Argo In­vest­ments, which man­ages more than A$5bn (R51bn) and holds BHP’s Syd­ney-listed shares. In­vestors are look­ing to MacKen­zie to show he’ll be “more dis­ci­plined in the cap­i­tal-al­lo­ca­tion process,” he said. BHP de­clined to com­ment on talks with in­vestors on the Jansen project. Po­tash de­mand could dou­ble by the late 2040s to de­velop into a $50bn mar­ket, Paul Burn­side, BHP’s prin­ci­pal, po­tash anal­y­sis, said yes­ter­day in a blog post on the com­pany’s web­site.

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