Just in from the Sydney Morning Herald - BHP ALERT !!!!!!!!!
Just in from the Sydney Morning Herald - BHP Jansen:
BHP could delay $12bn Jansen potash project
https://www.smh.com.au/business/bhp-could-delay-12bn-potash-project-20120212-1szno.html
A $US12 BILLION foray into Canadian potash has been tipped as the most likely of BHP Billiton's ''mega'' growth projects to face a delay or reduced investment.
The prediction, which was shared by multiple investment banks, followed revealing insights into BHP's growth program by chief executive Marius Kloppers during last week's results presentation.
BHP had been expected to commit a total of $US35 billion ($A32.77 billion) this year to the first stage of three ''mega'' projects; the expansion of Olympic Dam, construction of the Outer Harbour at Port Hedland, and development of the Jansen potash project in Canada. The BHP board had been expected to meet and consider final approval on all three before the end of 2011.
But in a cautious address, Mr Kloppers indicated spending on new projects could slow, particularly if market conditions deteriorated. Mr Kloppers proceeded to rank the projects according to various types of risk, declaring Olympic Dam to be the lowest risk in terms of market demand, and the Port Hedland project to be the easiest in terms of technical design and sovereign risk.
Jansen, however, was said to pose the highest risk from a technical design perspective, and was the least compelling in market terms given the relatively small global spot market for potash.
Mr Kloppers' monologue left most analysts with the impression that Jansen had become the lowest priority among the ''mega'' projects.
''Management acknowledged the projects need to be staggered due to the heavy capital commitment. In our view, Jansen is last cab off the rank due to greater technical and marketing risk,'' said analysts at RBS. Goldman Sachs said it had concluded that BHP would not approve all three this year if conditions deteriorated, while Merrill Lynch analysts said Jansen ''could fall at the bottom of the queue''.
A rethink is also under way in BHP's other growth sector - its US shale assets - where the company will now tailor its exploration towards wells rich in oil rather than shale gas to mitigate the impact of slumping US gas prices.
The rethink comes less than a year after BHP spent close to $US20 billion buying shale gas assets. Despite the company reporting one of the biggest half-year profits in Australian corporate history - $US9.94 billion - the market was not impressed by BHP's results.
More than 5 per cent was shaved off the company's share price between Wednesday and Friday, and the stock last traded at $36.30.