BHP Fertilizer Interest May Hurt Prices, Moody’s Says (Update1)
February 25, 2010, 1:01 PM EST
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By Firat Kayakiran
Feb. 25 (Bloomberg) -- BHP Billiton Ltd. and Vale SA’s interest in the mineral fertilizer industry may result in excess capacity and weigh on prices, Moody’s Investors Service said.
BHP and Vale, the world’s two biggest mining companies, last month agreed to spend $4.9 billion on separate fertilizer acquisitions in an effort to benefit from expectations for surging demand. Soil-nutrient sales may climb in coming years as global demand rebounds, Potash Corp. of Saskatchewan Inc., the largest fertilizer maker, said last month.
“New production capacity coming on stream over the next 10 years could lead to overcapacities and possible pressure on prices,” Moody’s said today in a report released on its own news wire.
Saskatchewan’s government expects an 88 percent increase in regional production capacity by 2020, according to the report. Two new BHP projects will account for much of the gain, according to Moody’s.
Vale agreed in January to buy a Bunge Ltd. unit that owns phosphate rock mines and assets in Brazil as well as Bunge’s 42.3 percent stake in a local fertilizer maker. BHP agreed to buy Canada’s Athabasca Potash Inc., acquiring the Burr project, adjacent to its Jansen project.
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