Activist investor Elliott Advisors has criticised BHP Billiton's proposal to diversify into potash as "disastrous".
BHP owns the huge Jansen potash mine in Canada, and it has plans to put nearly $4bn into developing the mine.
Earlier this week Paul Burnside, the company's principle potash analyst, wrote on BHP's website that the firm expects demand for potash, which is used to make fertiliser, to double by the late 2040s, creating a market worth $50bn (£39bn).
Analysts have argued against the development of the project, which they say is low returning and high risk.
BHP is now arguing that it should spend billions of dollars of shareholder money to diversify into potash. This sounds alarmingly familiar and comes as the company proclaims the dubious strategy of 'Thinking Big' – a concept that has been disastrous for BHP shareholders.
Elliott warned this move would be a repeat of the company's venture into the US shale market, in which it said BHP invested $30bn in assets that are today worth just $6.5bn.
With that track record shareholders are correct in asking: Is potash the next US shale? We share the deep concerns raised by analysts and shareholders that expanding into potash could be a 'severe strategic misstep'.
In September Ken MacKenzie is set to succeed Jac Nasser as chairman of the world's biggest mining company, and Elliott said MacKenzie's appointment is an opportunity for the company to set a new strategy and avoid repeating costly mistakes.
"Billions in shareholder value is at stake," Elliott said.
In May, Andrew Mackenzie, chief executive of BHP, said first production could be possible in 2023, but the company's main focus is on value.
Growth options will always be assessed through the capital allocation framework, and that includes being tested against additional cash returns, including a return on a buyback. We will only develop when the time is right.
While the potash market is currently experiencing a supply glut, BHP said the market is expected to rebalance in the mid-2020s, and no board decision will be made before June next year at the earliest.
BHP yesterday announced it will increase spending on its US shale fields to $1.2bn from $0.55bn as it ramps up development.
Analysts have said this could be a sign the company is looking to sell its US onshore division.
BHP Billiton declined to comment.