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BHP Billiton slowdown a boon for Potash Corp.

Ottawa rejected BHP Billiton's $38.6-billion takeover offer for Potash Corp. of Saskatchewan


BHP Billiton Ltd. , the world's largest mining company and former Potash Corp. of Saskatchewan nemesis, may be inadvertently helping out its Canadian rival. At least for now.

The Anglo-Australian firm, pressured by rising costs and slowing demand for resources, is reconsidering the timing of three major projects, including its $12-billion Jansen potash mine east of Saskatoon.

Globally, there are four large new potash mines currently being considered. Jansen -- which has the potential to become the globe's largest -- is one of them, notes Joel Jackson, an analyst at BMO Capital markets. (Germany's K+S has dibs on a project in Saskatchewan; Russia's EuroChem Mineral and Chemical Co.'s plans to dig for potash in its home country; and Vale SA is toiling in Argentina).

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Three of these new projects are facing problems. BHP may hold off on making major investments on Jansen; EuroChem is struggling with sinking shafts; and Vale may ditch plans as Argentina threatens to nationalize assets, Mr. Jackson said.

This puts Potash Corp., along with Mosaic Co., in a comfy spot. Just a few months ago, these two power players (along with their Russian counterparts) were facing fresh competition, threatening to end their near-monopoly. But with major projects on the rocks, Potash and Mosaic investors have a little extra breathing room.

Some investors have been concerned that Potash Corp., Mosaic, and Russian potash firms would react unwisely as outsiders threaten their monopoly. The market worried "new greenfield supply will come on from new entrants that don't want to practise producer discipline," Mr. Jackson said.

New potash mines would change the game. But now, instead of new potash supplies trickling in around 2015-2016, it could take until 2019 before a fresh wave of the commodity hits the market.

As a result, Potash Corp.'s grip on the market remains tight. And Bill Doyle, the company's chief executive, has rival BHP CEO Marius Kloppers to thank.

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