According to Deutsche Bank AG, BHP Billiton Ltd, the world's biggest mining company may attract investment of USD 2 billion from fertilizer makers as well as sovereign wealth funds in its Canadian potash project.
Deutsche analysts Mr Grant Sporre, Mr Paul Young and Mr Rob Clifford said that "Bringing in one or more partners would reduce the capital outlay for shareholders and guarantee long term sales volumes." They said that the sale of a 25% stake could attract investment from fertilizer producers in China, India, US and South America.
Mr Marius Kloppers CEO of BHP 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 USD 7.3 billion by Deutsche Bank and would be the Melbourne-based company's first foray into mining of the crop nutrient.
Deutsche Bank said that first production from the project in Saskatchewan may start in 2017 and reach capacity of 8 million metric tonne annually by 2024, estimating the cost of development at USD 5 billion to USD 6 billion. An expanded operation to 16 million tonne of production would cost a total of about USD 15 billion.
Mr Kloppers said that BHP is continuing preparatory work at the site including developing 2 underground shafts to extract the material. The company is still correct to target potash as a key commodity.
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 USD 40 billion hostile bid for Potash Corp. of Saskatchewan Inc, the world's biggest producer was blocked in 2010 by the Canadian government.
