The Financial Post reported that BMO analysts are saying that BHP’s plans to build what will likely be the biggest potash project in the world, are ill-advised, and would be better off focusing on shareholder returns.
As quoted in the market report:
Put simply, they think that the economics of Jansen are not attractive. Using a potash price of US$450 a tonne (just below current levels), they projected an internal rate of return (IRR) for Jansen of just 10%. To get to a more reasonable IRR of 12% to 15%, they calculated that a “lofty” long-term price of at least US$600 would be required.