TSXV:AAA.P - Post by User
Post by
Karmanowon Apr 03, 2011 9:37pm
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Post# 18379905
BHP Economics 101
BHP Economics 101Like many here, I hope the results of hole #13 come out this week, and I hope Farhad has tied up either the Nova or Samarian Lands....it appears to be a slow process but when you look at all the news releases of 2010-2011 you can see a company on the move...knocking off one milestone at a time..it is all falling into place as it is meant to be...its just Karma.
World Potash Demand*
Projected 2011 demand to approximate 55-60 million tonnes After the record decline in 2009 and signifi cant recovery in 2010, we believe the factors are in place for the next stage of growth in potash demand. With a highly supportive pricing environment for global agriculture commodities and a potash supply chain that has yet to be restocked, we expect demand to increase from approximately 52 million tonnes in 2010 to 55-60 million tonnes in 2011. The lower end of the range is in line with the long-term consumption trend line and the higher could be reached if farmers and fertilizer dealers move more aggressively to replenish depleted inventories in the soil and supply chain. Remember, Allana still makes very good profits at $300 per tonne potash...and BHP knows this. We will be one of only a few deposits/mines that can withstand any downturn in demand and thus pricing for KCL. Right Place...Right Time...One Drill Hole at a time.
Projected World Demand Million Tonnes KCl
* Includes imports and domestic producer sales
Source: Fertecon, Industry publications, PotashCorp
2010 2011
China 8.9 11.0 – 11.8
India 6.3 6.3 – 6.9
Other Asia 6.0 6.3 – 6.7
Latin America 8.4 9.1 – 10.5
North America 10.2 9.8 – 10.3
Other 12.1 12.5 – 13.8
Total World 51.9 55.0 – 60.0
What else BHP knows. The Basin in Russia is not for sale..the two major potash mining companies have just merged.
The Basin in Sask. is not for sale...and BHP can build their new mine but can not take out the "best of breed" Potash Corp. as we have seen nor can they take out the whole basin. The two basins left are the Amazon and the Ethiopian Basins. Ethiopias Basin is in the early stages of proving up the shallowest deposit in the world. BHP already owns the lower section of the basin and is preparing to drill this year. The thing about Multinational Mining Companies like BHP is that they leave their emotions on the sidelines and operate based on strict economics and long term value for the company. As was said in my earlier post, Potash Corp. has it right by saying: "
Since most potash producers are...publicly owned and traded, these barriers to entering the business are important as investment decisions tend to be based on economics" Retail investors should look forward at the long term....just like BHP and see that when you factor in demographics, food supply shortages, loss of arable lands, climate change and disasters, crop failures and other circumstances....it really is about investing based on economics. If BHP does not take up the opportunity to buy out the Ethiopian Basin after the junior miners resources are proved up....then some other major will most certainly take a very good look...as it is about economics...and growth ...and adding dollars to the earnings per share..
I truly believe that we will not recognize this basin in 5 years time...it will be the most profitable basin in the world and allow for both solution mining and open pit mining, produce both MOP and SOP,.and allow miners to get to production in half the time of the deeper basins....BHP "could" own 75% of one of "The 4 Horsemen"....time will tell. 