The new chief executive of BHP, the world’s biggest natural resources group, has brushed aside concerns about the re-entry of Anglo American to the fertiliser market.
Anglo is poised to acquire Sirius Minerals, a UK-listed company that has been struggling to develop a giant potash deposit under a national park in North Yorkshire.
If the deal is completed it threatens to add more fertiliser to an already oversupplied market.
Mike Henry, who took the helm of BHP at the turn of the year, said the 10m tonne a year Sirius mine would be producing a completely different commodity to potash.
The mineral Sirius plans to produce is called Polyhalite. It contains four of the six macronutrients essential to plant growth — calcium, magnesium, potassium and sulphur — and Sirius claims it can be used straight or blended with other fertilisers
Asked about the Anglo deal, Mr Henry, said “There’s no change in our views on Jansen or potash. We like the commodity.”
Jansen is a Canadian potash project that BHP has already ploughed billions of dollars into developing.
Mr Henry said he would decide by February 2021 whether to seek final board approval for the project. To bring Jansen into production, BHP will have to spend at least a further $5bn unless it can find a partner to help finance part of the investment.
“There are two hurdles that need to be met. One: it [Jansen] needs to complete well under the capital allocation framework. Meaning returns, risk and so on,” said Mr Henry. “And secondly as the new CEO — and being aware that this is a big decision — naturally I want to make sure I am comfortable with the capital and operating expenditure assumptions.”
The Sirius bid marks a return to fertiliser for Anglo, which sold its phosphates business in 2016.
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