BHP sets deadline for Canadian potash growth project

BHP has set a deadline for the approval of a key growth project, as its operations set a soft start to the financial year.

Nick Evans

Analysts are divided on the wisdom of BHP’s Canadian potast project. Picture: Bloomberg

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9:14AMOctober 17, 2019

BHP has set a deadline for the approval of its giant Canadian potash project, a key growth project, as the mining giant’s operations set a soft start to the financial year.

BHP said on Thursday its board would make a decision on the $US5.7 billion Jansen potash project by February 2021, authorising another $US344 million in development capital to prepare the deep underground mine ahead of a final investment decision.

While BHP boss Andrew Mackenzie has consistently pointed to the giant fertiliser mine as a key growth plank which positions the mining giant to counter slowing growth in its other commodities, the value of the project has divided analysts and investors. The argument is over its cost and whether BHP risks building the massive mine into an oversupplied market.

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BHP declared the decision date as its existing operations put in a slightly softer quarterly performance in the three months to September, which the company attributed largely to planned maintenance across its major operations.

Total output from BHP’s Pilbara iron ore operations fell 3 per cent from the June quarter to 69 million tonnes, as it carried out maintenance at its Port Hedland port operations.

Queensland metallurgical coal output fell dramatically compared to the June quarter, down 21 per cent to 16 million tonnes, due to planned major plant shutdowns at its Goonyella, Peak Downs and Caval Ridge, which is operated in a joint venture with Japan’s Mitsubishi.

Thermal coal output also fell as BHP high-grades its Mt Arthur mine in NSW, with output down 34 per cent quarter-on-quarter to 4m tonnes.

On a quarter-on-quarter basis, only BHP’s Escondida copper mine and Cerrjon thermal coal mine lifted production for the period, with total production down 3 per cent for the period on a copper-equivalent basis.

BHP shares closed at $36.04 on Wednesday.

Nick EvansResource Writer

Nick Evans has covered the Australian resources sector since the early days of the mining boom in the late 2000s. He joined The Australian's business team from The West Australian newspaper's Canberra bureau, where he covered the defence industry, foreign affairs and national security for two years. Prior to that Nick was The West's chief mining reporter through the height of the boom and the slowdown that followed.

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BHP sets deadline for Canadian potash growth project

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