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BHP's move into potash

August 23, 2010 - 00:00 GMT

KEYWORDS: BHP , Potash Corp. , fertiliser , Rio Tinto , Vale , Sibelco , Imerys , mineral sands

Where the grass is greener: Mining leader targets potash as the big time industrial minerals winner

The initial offer, immediately rejected by PotashCorp., could represent the biggest business transaction of the year, and in the minerals world, set to be larger than Rio Tinto’s acquisition of Alcan Inc. in 2007.

Why potash? Why now?

Well, the short answer could be “Why not?”

Fertiliser minerals, in particular potash and phosphate, started to drift on to the radar of mineral developers and investors in the mid-2000s, as demand increased and prices followed suit. From a generally unattractive, relatively low priced commodity, potash soared to the heady heights of $900/tonne during 2007 to mid-2008. Soon everyone was seeking out potash and phosphate resource claims, and are still.

Sure, the recession hit in 2008, demand fell and is now slowly recovering. Potash prices at present are around $450-500/tonne.

But potash exhibits just what is fundamental to the industrial minerals (IMs) business and in a...

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