BHP denies report that Canada $12bn potash project may be scrapped

09 November 2010 15:34  [Source: ICIS news]

TORONTO (ICIS)--BHP Billiton remains committed to its massive Jansen potash project in Canada, even after the courntry’s government has rejected BHP’s $39bn (€28bn) planned hostile takeover bid for PotashCorp, a spokesman said on Tuesday.

BHP spokesman Ruban Yogarajah was responding to a report in Canada’s national Globe and Mail newspaper that said BHP may cancel Jansen, which at an estimated cost of $12bn would be world’s largest potash mine.

The paper’s comments and quotes were taken out of context, Yogarajah told ICIS. Rather, BHP was progressing with the project and was awaiting environmental assessment findings, he added.

The paper, which cited internal BHP emails and documents disclosed as part of PotashCorp’s legal effort to stop BHP’s bid, said cost concerns had cast a doubt on Jansen.

With Canada's rejection of the bid for PotashCorp, BHP had less incentive to develop Jansen, the paper added.

As recently as late July, BHP CEO Marius Kloppers had allegedly threatened – in an internal email – to shut Jansen down because of rising costs for the first phase of the project’s development, the paper said.

Analysts said it was unlikely that BHP would shut Jansen down “in revenge” for Canada’s rejection of its PotashCorp bid.

Rather, any decision by the Anglo-Australian mining giant would be driven by business objectives, in particular the long-term outlook for potash markets and prices.

Canada’s industry ministry has granted BHP a 30-day appeal period to revise by 3 December its bid and convince the government that its takeover of PotashCorp will be of “net benefit” for the country.

However, Canadian analysts have said the rejection of the PotashCorp bid seemed to be driven by political reasons and that that BHP's chances of succeeding with a revised bid were slim.

($1 = €0.72)

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By: Stefan Baumgarten
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