18 May BHP aiming to bring $5.7 billion potash project online a year early
BHP chief executive Mike Henry is pushing for an early start at the company’s US$5.7 billion Jansen potash project in Canada, amid fears of global food and fertiliser shortages exacerbated by Russia’s invasion of Ukraine.
The continuing conflict in Ukraine has interrupted global grain supply coming out of Eastern Europe as well as fertilisers, since neighbours Russia and Belarus account for almost 40% of global production.
In mid-February, Belarus state-owned potash miner Belaruskali declared force majeure on its contracts, shaking up a market that was already contending with soaring potash prices. Potash is a mineral fertiliser which boosts drought tolerance and improves crop quality.
BHP approved the huge investment in the Jansen project, located in Saskatchewan, last year after several unsuccessful attempts to enter the potash market going back to a $38.6 billion bid for Potash Corp (which later merged with Agrium to form Nutrien) in 2010.
“[Recent supply disruption] has positively reinforced the decision we’ve taken to enter potash,” Henry said at the Bank of America Metals and Mining conference earlier this week. “We are making good progress and we’re looking at potential to accelerate Jansen Stage 1 first production into 2026.”
Jansen is expected to produce around 4.2 million tonnes a year of potash during the first phase. Stage 2, which the company has already started undertaking technical studies for, would add an additional 4 million tonnes per year.
BHP expects potash demand to increase by 15 million tonnes to roughly 105 million tonnes by 2040 or 1.5% to 3% a year, along with the global population and pressure to improve farming yields given limited land supply.