BHP Billiton (BHP) is adopting a "wait and see" approach to developing its Canadian potash project with a view to getting the timing of the project just right in order to maximize shareholder return, the company's chief executive said Thursday.
BHP gave the go-ahead earlier this year to invest $US2.6 billion in its Jansen potash project but refrained from giving a timeline for when the project will start production. Potash is a potassium-based ingredient used in fertiliser.
"We think that under most scenarios this will be a very high return project for shareholders," BHP chief executive Andrew Mackenzie told shareholders at the company's annual general meeting.
"But we are uncertain about timing," he later told reporters, noting that the company is waiting for a gap to appear in the market that will maximise the project's return to shareholders.
He said the gap could appear sometime in the next ten to 15 years, although he said it could be earlier or later.
For the moment BHP is focusing on derisking the investment by completing some of the more difficult parts of the project, such as sinking shafts, over the next three to four years, he noted.
Once the shafts have been sunk, the company can move quickly to develop the project if the opportunity presents itself, he added.
"If circumstances were to change we can actually even speed up now, but I would say right now...it's actually quite a good idea just to wait and see."
He said the company is waiting to see what will happen to the potash market now that Russian potash producer Uralkali ended its long-running partnership with Belarussian potash producer Belaruskali.
The partnership was part of a cartel approach to marketing potash, which ensured that potash prices globally remained relatively well supported in order to ensure a return on projects.
BHP had said that the company would be interested in bringing in a partner to develop the Jansen project.
Mr Mackenzie confirmed that the company has talked to "many" counter-parties about a potential partnership with some returning calls but he didn't provide further details.
Mr Mackenzie also denied the resources giant was burying its head in the sand regarding the risk climate change poses to its profitability.
Nasser eyes Asian growth
Meanwhile, BHP chairman Jac Nasser said the mining giant was expecting strong growth in Asia.
"In Japan, the renewed policy push is positive for medium-term growth, if the government can achieve its stated objectives," he said.
"In China, which accounts for about 30% of our revenue, weaker trade and softer manufacturing activity have been a slight drag on growth relative to expectations.
"You can see the impact of that in our financial results."
Mr Nasser told shareholders he was confident of the continued recovery in the US, despite some risk from the unwinding of monetary stimulus.
"Over the last year, the US experienced moderate growth rates, with the US housing sector and the stock market strengthening household balance sheets," he said.
"On the other hand, conditions in Europe remain challenging, although relatively more stable.
"The European economy still faces structural challenges and uncertainty is likely to continue in the near term."