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Part of a tunnel boring machine being unloaded for transport to the Woodsmith potash mine of ... [+] Britain's Sirius Minerals. Photo by Ian Forsyth/Getty Images.

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The greening” of the world’s biggest mining companies is accelerating with a rush into environmentally benign material, such as potash, a high-value fertilizer, matched by an exit from the most polluting of minerals—coal.

Global miner Anglo American flagged its renewed interest in fertilizer with a proposal last week to acquire a troubled British potash-project developer, Sirius Minerals, which is developing the Woodsmith mine in Yorkshire, in the U.K.

If successful, the $500 million takeover would mark a return to fertilizer three years after Anglo American sold a phosphate business as part of a company-wide clean up.

BHP, the biggest of the four major diversified western world miners, a group which includes Rio Tinto and Glencore, is also investing in potash through the development of a new mine in Canada.

More than $2 billion has already been sunk by BHP into the Jansen project in the province of Saskatchewan, and at least that amount needs to be spent to finalize construction and start delivering potash to farmers who value its beneficial effects on plant growth.

Green” Minerals Replacing Black Coal

BHP’s new-found interest in less environmentally polluting minerals has also seen it withdraw a nickel processing business from sale, thanks to surging demand for nickel from battery makers supplying electric car makers.

It’s not quite a revolution among the big miners, but it is definitely a sea change as pressures from environmental activists and governments make some of older minerals less acceptable to ethically-oriented investors.

Coal has, so far, been the business suffering the most severe pruning by the Big Four. Rio Tinto has sold all of its coal interests. BHP is mulling an exit of its thermal (power generating) coal assets while keeping its metallurgical (steel making) coal interests. Anglo American is considering its position, and only Glencore appears determined to stick with coal, and perhaps even expand output.

Selling Coal Mines, But Not Cutting Production

Selling coal assets has pleased some investors, but the exit process is more cosmetic than actually making a contribution to cutting the production of carbon dioxide, a gas blamed for climate change and the devastating bush fires which have damaged large tracts of southeast Australia, and could trigger a countrywide economic slowdown.

A bucket wheel reclaimer operates at the Newcastle Coal Terminal in Newcastle, north of Sydney, ... [+] Australia. Photographer: Ian Waldie/Bloomberg


What’s happening is that coal mines are being sold, but coal production is not declining because new owners are still able to obtain high prices from countries where coal is a key source of electricity, including China and India.

Lithium is another mineral high on the green target list of the Big Four because of its use in batteries, though copper is arguably the greenest of the metals thanks to its heavy use in all forms of renewable energy.

Potash Attracts, But It Might Not Be That Profitable

Potash, however, is where the green rush is becoming most interesting because it is a business currently dominated by a handful of Canadian and European producers. But it’s not wildly profitable, with more potash mines being mothballed over the past 12 months than have been opened.

A recent list of the mining world’s biggest winners and losers in 2019, using stock market value as the yardstick, showed that two of the worst performers were two of today’s leading potash producers: Mosaic and Nutrien.

Squeezing two big new suppliers of the fertilizer into an already well-supplied market almost certainly means that prices will fall further and high-cost producers will be forced out.

But for BHP and Anglo American, there is an urgency in developing new business units to replace those earmarked for disposal, especially coal assets.

Prairie Machine electric vehicle sit parked at the entrance to the Nutrien Ltd. Cory potash mine in ... [+] Saskatoon, Saskatchewan, Canada. Photographer: James MacDonald/Bloomberg

2019 Bloomberg Finance LP

As the potash deals currently stand, BHP is effectively halfway to becoming a producer, but with speculation common that it might complete construction of Jansen only to delay the start of production, twist which seems unlikely as Jansen has the potential to be the world’s cheapest source of potash.

Anglo American’s potash play is in the early stages of a bid for Sirius having been made at a low-ball price of 5.5 British pence (7 cents), an 85% haircut on the price of Sirius 18 mont

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