BHP delays $14 billion Canada potash push as profit drops By Sonali Paul MELBOURNE (Reuters) - BHP Billiton's new chief has put his stamp on the top global miner, mapping out a cautious approach to expanding into the potash market, which it sees as its next big growth business beyond 2020. CEO Andrew Mackenzie outlined the low-risk course as he handed down his first results, reporting a 15 percent drop in half-year profit before one-offs, which missed forecasts largely due to Australian mining tax adjustments and other non-operational items. BHP and Glencore Xstrata wrapped up the results season for the world's big five miners, with BHP holding up slightly better than its peers as it stepped up output of iron ore, copper, coal and oil and slashed $2.7 billion in costs in the face of sliding commodity prices. Major miners have come under pressure to rein in spending, sell off underperforming assets and tackle debt after years of rampant spending on new mines and acquisitions as commodity prices soared. Reflecting the austerity drive, BHP said it plans to invest $2.6 billion over the next four years digging shafts at the Jansen potash project, delaying production at least until 2020 from its original 2015 target, while inviting offers for stakes in the mine. "The whole basis of the strategy that we're being clear about today is that we want to retain complete flexibility to enter the market at a timing which we think is right to maximize returns for our sharheolders," Mackenzie told reporters. BHP put more than $40 billion worth of new projects on ice a year ago to combat costs that had grown out of control over the previous decade as miners raced to feed booming Chinese demand. Mackenzie reiterated that BHP remains confident in China's long-term growth prospects, as 250 million people move into cities and the country rebalances its economy toward consumption-led growth. "In the short to medium term, I think the signs are reasonably positive that they'll hold to their forecast for 7-8 percent annual growth," he said. He outlined a more aggressive cut in capital and exploration spending than recently flagged, with spending to fall 26 percent to $16.2 billion in the 2014 financial year. Attributable profit excluding one-offs fell to $6.12 billion for the six months to June from $7.18 billion a year ago. That was well below analysts' forecasts of $7.16 billion, according to Thomson Reuters I/B/E/S. BHP increased its final dividend by 2 cents to 59 cents, just short of analysts' forecasts at 60 cents. BHP's shares fell 3.2 percent in early London trade, underperforming a 0.8 percent fall in the FTSE 100 index. "We believe that the market may be surprised that the group is pushing ahead with its Jansen potash project in Canada," Investec said in a morning note in London. BHP has long planned to break into the potash industry, targeting a lucrative new business that has been controlled by two cartels, as developing countries look to grow more food over the next few decades. It has already invested $1.2 billion in Jansen and the timing of its entry has been closely watched by the world's major producers, led by Potash Corp of Saskatchewan, which BHP tried to take over in 2010. Its $39 billion bid was blocked by Canada on fears that potash prices and royalties would drop as BHP planned to split from the North American cartel. Now Russia's Uralkali has given potash producers a taste of what could happen as it recently quit the Belarusian Potash Co cartel. Mackenzie said once Jansen's shafts and infrastructure are in place, the mine would be about three years away from production, but the company would decide on when to begin producing based on the market and its ability to fund further development. BHP believes the project will generate returns well above the company's average returns over many decades, he said. "As long as we get the timing right, we're not overly aggressive, we think those returns are there," Mackenzie said.