(BHP) BHP Billiton Limited Invests Further in Canada

BHP Billiton Limited (BHP) has approved another investment of $488 million to support the development of the Jansen Potash Project in Saskatchewan, Canada. The funding will help in supporting the project’s feasibility study related to preparation and procurement of long lead time items.

This investment raises BHP Billiton’s contribution in Jansen to $1.2 billion. The total funding toward Saskatchewan thereby rose to almost $2 billion, indicating the company’s potash business development intentions in the province.

The project is designed to produce approximately 8 million tons per annum of agricultural grade potash with an estimated mine life of around 70 years. The funding will now enable BHP Billiton to develop the first 382.8 yards of the production and service shafts, on receipt of necessary Government approvals on environment issues.

In February 2011, BHP Billiton entered into the feasibility study phase of the Jansen Potash Project. Based on the current schedule, Jansen is expected to start producing saleable potash from its 3,370 million-ton plant in 2015.

As Saskatchewan is a potential area for potash production, BHP believes that it has the potential to reach the annual production capacity of more than 16mtpa. Therefore, the company eyes generating business in the basin and plans to start drilling at Melville in July 2011. The company has already undertaken 2D and 3D seismic surveys of the project area.  The Boulder and Young projects are also in progression along with other studies in the area.

BHP Billiton is one of the world’s largest diversified resource companies with operations spanning over several continents. It operates in mineral exploration, production and processing, oil and gas exploration and development, and steel production and merchandising. The company contests directly with its peers, such as Alcoa. Inc (AA) and Vale S.A (VALE).

We currently maintain a long term Neutral recommendation on the stock. BHP has a Zacks #1 Rank, which translates into a short-term Strong Buy rating (1-3 months) based on its key investment strategy.

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