Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
BHP is considering selling a 25% stake in Jansen, its Canadian potash project, according to a Reuters report quoting anonymous sources.
The Anglo-Australian mining giant is working with an investment bank for the potential sale and according to the report a deal “could be worth close to $2 billion.”
If you bring in a partner, you can share the capital and risk and, depending on who the partner is, help secure an off-take (supply agreement) or offer expertise
BHP spokeswoman Bronwyn Wilkinson told Reuters “it was too early in the process for the company to have determined the size of a potential stake sale.”:
“If you bring in a partner, you can share the capital and risk and, depending on who the partner is, help secure an off-take (supply agreement) or offer expertise,” Wilkinson said.
Activist investors Elliott Advisors have put pressure on BHP to quit the project in the province of Saskatchewan, stating that bringing Jansen into production would be “a severe strategic misstep”.
BHP has spent more than $2 billion on its first foray into potash and the mine could have a final bill north of $12 billion. At capacity Jansen could produce 8 million tonnes of potash a year or nearly 15% of global output of the crop nutrient, but BHP’s phased approach would see commercial production around half that figure.
CEO Andrew Mackenzie said this week the project won’t come before the board before 2019 and that a number of options – including divesting – are on the table to proceed with Jansen.
BHP is spending $500m to finish Jansen’s two shafts by the end of 2019 and Mackenzie pointed out that once the shafts are completed by the end of 2019, Jansen would be “totally de-risked” and engineers would have “dealt with all the difficult parts”.
By that time according to Mackenzie: “We will only be three years away from first potash.” BHP also touted 2023 as a possible start-up date for Jansen earlier this year.
7 Comments
Granite Capital
Here’s yesterday’s article: ”
Shale may be gone but BHP won’t ditch potash” and now this? Interesting. Looks like someone had a change of heart in less than 24hrs.
Granite Capital
Seems as though Elliott is running BHP and NOT BHP…………
SeatrendStrategy
Sounds like investors should be looking at public companies focused on agricultural gypsum! This is an incredible mineral, with significant demand, that provides farmers with a 20 – 40% yield increase.
Johnny
BHP should just buy Mosaic for what it costs to complete Jansen. They’d already have a Potash business up and running.
Johnny
For the cost it will take them to bring Jansen to fruition, BHP should just buy Mosaic ! The business is already up and running and they’d get a phosphate business to boot.
Marc
Don’t forget that BHP tried to buy Potash Corp in 2010. They could not proceed because of regulatory issues (basically a veto from the Canadian government back then)
Dennis Reardon
Greetings.
I am urgently looking for positive investment opportunities and running business partnerships for my investors to invest in Real Estate, Construction, Transportation, Agriculture, Mining and Business Services etc.
My investors have available required investment capital and looking for any investment opportunities to invest in like a silent partner i need serious business investment opportunities with income generating value i am looking more on long term partnership investments which have good profit margin and need additional capital for expansion. Email: [email protected]
I look forward to your response.
Regards.
Dennis Reardon
Investment Consultant.