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Big miners catching fertilizer fever

July 17, 2009
Concentrated ownership, long-term future and low-cost assets are fuelling a growing interest in ownership of fertilizer companies, including rumours that BHP Billiton is trying to acquire Potash Corp. of Saskatchewan.

July 17, 2009  By Financial Post

July 17, 2009

Peter Koven, Financial Post

For many months, international mining giants such as Vale SA and BHP Billiton Ltd. have looked at the big fertilizer exporters with envy.


Fertilizer is a business that has all the characteristics they could possibly want: concentrated ownership, long-life and low-cost assets and huge customers in China and India that need the product in order to feed their growing middle classes.

So it is not surprising that a report out of Brazil yesterday said that Vale is considering a US$25-billion bid for MosaicCo. It follows endless rumours that BHP could take a run at Potash Corp. of Saskatchewan Inc.

While experts say that neither of these transactions is likely, they do fit into the stated strategy of the big mining companies, which have made no secret about trying to expand their fertilizer businesses.

Vale has made some small steps into the fertilizer sector, with a potash mine in Brazil, a phosphate development in Peru and some other assets in the Americas that it bought from Rio Tinto Ltd. Likewise, BHP plunked down $284-million last summer to buy Anglo Potash Ltd. That gave it a greenfield project in Saskatchewan's Athabasca Basin, home of a vast supply of potash.

But to gain real scale in the fertilizer sector in North America, there are only three targets to look at: Potash Corp., Mosaic and Agrium Inc. Collectively, they run Canpotex Ltd., the world's biggest potash exporter, and have huge influence over global prices.

A lot of long-term value in fertilizer companies


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