BHP poised to hit ‘go’ on Jansen potash project
BHP is set to finally declare it’s proceeding with its $7.5bn Canadian Jansen potash development after a port access deal.
BHP is poised to finally declare it is proceeding with its $7.5 billion Canadian Jansen potash development after reaching a deal for port facilities with Westshore Terminals.
Port facilities were one of the final hurdles to clear for the mining giant’s Saskatchewan project.
The project will be the company’s first new resource for a decade or more and will also be classed as future-facing which positions it well for the net zero emissions future.
The company is due to unveil its financial results on August 17 and the board meeting before the results is a possible time to hit the green light.
Just whether the company will want to provide some clear air for the announcement remains to be seen but this is a venture which the company has had under examination since 2006.
Last month it held a market briefing designed to show the market fundamentals in favour of the product and noted finding the appropriate port in Canada to help get the potassium product to market was the major hurdle.
Market talk had suggested potash leader Nutrien may want a joint venture with BHP’s Jansen mine or maybe some form of infrastructure sharing just to keep an eye on its rival.
Not surprisingly, BHP made it clear on this project it doesn’t need help with the first stage of about 4.4 million tonnes at a cost of about $US115 a tonne, in a market where the average price is about $US350 a tonne. The economics are clear.
With iron ore earnings at $US20bn, potash at about $5bn is not in the same league, but key is the company is sitting on plenty of low-cost, high-grade supply and the demand outlook for food, fuel, feed and fibre was, as noted, almost boringly predictably good.
BHP has looked at potash since 2006 so it’s not like it doesn’t know the market and it appears the green light on a project that has already consumed $US3bn is all but certain. Growth options are not in abundance elsewhere.
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