BHP Billiton has committed $US2.6 billion to its Canadian potash project in a surprise move, as the mining giant suffered a heavy fall in annual profit.
BHP's net profit plunged by 30 per cent in the 2012/13 financial year to $US10.9 billion ($A12.03 billion).
Weaker commodity prices were the main cause, and BHP is slashing costs and capital expenditure in response, cutting spending to $US16 billion in 2013/14 from about $US22 billion in 2012/13.
But chief executive Andrew Mackenzie has backed the future demand for potash, which is used as a crop nutrient, despite many analysts and investors urging the company not to spend money on it.
BHP's $US2.6 billion spend on the Jansen Potash project is viewed as a compromise, as the cost to get into production would be about $US12 billion.
Mr Mackenzie also raised the prospect of introducing one or more partners into the project to ease costs.
"I think it is a vote of confidence in the project," he told reporters.
"We believe that from the next decade, 2020 onwards, the world will require new (potash) mines.
"Demand is growing at 2-3 per cent per annum but we want to get the timing absolutely precise.
"We have actively been approached by people on what might be possible."
The product is different to the iron ore, coal and oil and gas that BHP has traditionally made money from, but is also viewed as a consumption commodity for the future as the world's population and incomes grow.
"It surprises me particularly when they're tightening the belt but I guess their thinking is that they have to plan for the future, they can afford to take risks," Morningstar analyst Mark Taylor told AAP.
"Maybe they're thinking some of the traditional early cycle metals like iron ore, metal coal etcetera, will potentially not be at the fore the way they have been, so they have to diversify."
Underlying earnings in all of BHP's businesses fell in the 2012/13 financial year.
Iron ore was the biggest earner with $US11.12 billion, but that was down 22 per cent on the previous year.
Mr Mackenzie said he was not concerned about China's economy, saying its urbanisation required 250 million people moving from the countryside to the cities in the next decade, and 7-8 per cent annual growth.
"That will only support the commodities we make and underpins our desire to be diversified," he said.
BHP's profit excluding one-off financial items dropped by 31 per cent to $US11.8 billion ($A13.02 billion), well below analysts expectations of $US12.6 billion ($A13.9 billion).
The year was characterised by slowing global growth and weaker commodity markets, and the company's tax rate increased, Mr Mackenzie said.
BHP said it reduced controllable cash costs by $US2.7 billion ($A2.98 billion) during the year.
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