Replies to post #3921 on The Oil and Gas Pipeline

[Golden Cross]

BHP looks to cash in from potash holdings

CAMERON FRENCH

Reuters

June 11, 2008

TORONTO -- BHP Billiton Ltd. is hoping for big things from its portfolio of potash properties in the Canadian prairies, the head of the company's special projects group said yesterday, although he said it was too early to say when it might decide to build a mine.

The appeal of the industry for BHP and other mining companies has soared recently in tandem with world prices for potash, which have tripled in some cases over the past year. Demand for the fertilizer has jumped along with grain prices.

Speaking at a mining conference in Toronto, BHP's Graham Kerr said the company planned to use its financial might and personnel resources to get into an industry that is typically tough to crack due to the huge costs and long lead times of building deep potash mines.

"We see potash as a highly attractive industry," he said. "Across Manitoba and Saskatchewan, we will pursue multiple projects over the course of the next few years."

Meanwhile, world supplies of potash have been tight as years of relatively stagnant prices made producers reluctant to start new mines.

Potash is currently mined only in 12 countries, and producers are essentially sold out at a time when farmers are willing and able to pay as much as $1,000 (U.S.) a tonne, more than triple last year's going price.

BHP made the decision to get into the business two years ago, and now has more than 7,000 square kilometres of exploration property in the provinces of Saskatchewan and Manitoba.

In May, BHP launched a $284-million (Canadian) bid for Anglo Potash Ltd. to gain full control of an exploration joint venture.

Mr. Kerr said the company plans to do extensive seismic surveying and will drill 21 holes over the next year on properties it has identified as high-priority.

"It's probably too early to talk about timing [on a decision on mine construction]," he said. If and when BHP decides to build a mine, it would represent the world's first new potash mine in more than 20 years.

The industry is currently dominated by Potash Corp. of Saskatchewan Inc., whose stock has nearly tripled over the past year. Mr. Kerr was also asked if BHP might consider a partnership with Canpotex, which markets and distributes potash on behalf of Saskatchewan producers, Potash Corp., Agrium Inc., and Mosaic Co.

"I guess at the early stage of the project, nothing's certainly out of the cards or off the table," he said