MENU

BHP excited over Canada’s potash prospects

Recent exploration work undertaken by BHP Billiton (ASX: BHP) in the Canadian state of Saskatchewan has suggested that the miner’s Jansen potash project could just be the beginning of a “basin-wide play” that could see the fertiliser ingredient become one of the company’s ‘pillars’ alongside iron ore, copper, petroleum and coal.

Despite a heavy drop in the price of potash mid-this year, BHP approved US$2.6 billion worth of spending on the Jansen project over the next five years to continue its gradual push into the industry.

Although investors didn’t take the news too well at the time, the prospects of potash are now looking more promising. Whilst the miner’s CEO, Andrew Mackenzie, confirmed at the AGM on Thursday that investment in the basin would be gradual, he also deemed it “very exciting”, suggesting that demand for the resource will likely grow at up to 3% annually over the next 17 years – which can largely be attributed to a rapidly expanding global population.

However, to truly recognise the benefits of the resource, BHP also conceded that Jansen, on its own, probably wouldn’t be enough. Mackenzie said: “On its own, Jansen is probably not a big enough resource for us to be a business that would rival our other four pillars, we need several Jansens… The news is good, we feel very confidence that we now have many more Jansens that future generations of management con consider to think about this as a basin-wide play.”

BHP’s shares are trading 0.5% higher today, whilst rivals Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) have also risen 0.5% and 0.6%, respectively, continuing their gains as confidence returns to the sector.

Foolish takeaway

Other than the prospects of potash, discussions regarding climate change policy were also a key topic whilst Ian Dunlop’s attempt to be elected to the miner’s board was also rejected. Furthermore, the company also stated its intentions to continue divesting from non-core assets, although it will take a more “patient and disciplined” approach to doing so.

Get our top dividend stock FREE!

If you are looking for some stock ideas to add to your portfolio today, look no further than our #1 dividend-paying stock. Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.