BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie said the Jansen potash project in Canada must meet “certain criteria” if it’s to proceed as the world’s biggest mining company cuts billions of dollars of capital spending.
Potash “is a great option but it’s just an option,” he said today in a speech in London at the annual dinner organized by the Melbourne Mining Club.
Mackenzie, who took over as CEO from Marius Kloppers last month, said he’s seeking to cut annual expenditure to a maximum of $15 billion in the next two to three years. The Melbourne-based company is part of an industrywide drive to boost returns after commodity prices dropped.
The development decision on Jansen was delayed in August by Kloppers as part of a plan to shelve all major project approvals for the 2013 fiscal year. Jansen, located in Saskatchewan, may cost about $15 billion to build, Bank of America Merrill Lynch analysts Peter O’Connor and Jason Fairclough wrote in a report dated yesterday.
Potash Corp. of Saskatchewan Inc. CEO Bill Doyle said last month the economics of Jansen “don’t work” and that it’s unlikely to proceed.
BHP may only to proceed with developing the mine on a “de-risked basis,” either through selling a stake or bringing in a joint-venture partner to help fund construction, the Merrill Lynch analysts wrote in the report.
Mackenzie also said today that BHP’s primary focus is not to grow via acquisitions. BHP and Rio Tinto Group are among mining companies selling assets to shore up earnings and cut costs after more than $60 billion of writedowns in the industry.
BHP fell 1.2 percent to 1,821 pence by the close in London today, the lowest in more than a month.