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Although the process of shedding non-core operations and implementing cost-cutting measures is far from over for BHP Billiton (ASX,NYSE: BHP) (LON:BLT), the miner is likely to resume its massive Canadian potash project as soon as the freeze on approving new projects expires in June.
The Sydney Morning Herald reports the world’s biggest resources company by market value confirmed Wednesday the freeze would not extend into the next financial year, and that Jansen may be one of the first to be approved.
Last year BHP shelved several mega projects, including the $10bn Jansen potash project in the Canadian province of Saskatchewan and the $20bn expansion of the Olympic Dam copper mine in South Australia.
The miner blamed a weaker outlook for commodity prices and cash flows for these decisions and took nearly $3.3bn of asset writedowns, the bulk of it on the ill-timed purchase of US shale gas assets in 2011. The remainder was a charge against its nickel division in Western Australia, acquired through its purchase of WMC Resources in 2005.
Speaking at a Bloomberg Economic Australian Economic Summit in Sydney this morning, BHP’s chief financial officer Graham Kerr also referred to recent comments from Ivan Glasenberg, Glencore’s chief executive, who said big resource companies such as BHP and Rio had “screwed up’” by building too many mines.
“Australia is not the only place in the world that has iron ore. And the reality is if you do not get your product to the market then someone else will,” Kerr was quoted as saying.
Jansen has the potential to become the world’s biggest potash mine and could cost as much as $12bn to set up. So far, BHP has spent more than $1.2bn to bring the project to the feasibility stage and has undertaken some construction.
What makes Jansen attractive is that start-up could happen as early as 2015, adding another 8m tonnes to global capacity.
The company is set to report its March quarter results one week from today on Wednesday April 17.
