BHP Ltd. said it will not be seeking the go-ahead for its Jansen potash project in Saskatchewan next year due to uncertain timing of the need for new supply of the nutrient.
“As we continue to work on improving the risk return metrics of the project, we will not be seeking board approval in the 2018 calendar year,” BHPs chief financial officer, Peter Beaven, said in an earnings call earlier today.
“While timing is uncertain, we have no doubt that the world will need new potash supply. When it does, we believe Jansen is best placed,” he said.”But Jansen will not proceed unless it passes our strict capital allocation tests.”
As recently as this past May, BHP CEO Andrew Mackenzie said the decision by the mining giant’s board could come as early as June 2018 (GM May 19, p.1).
BHP expects Jansen’s two production and service shafts to be finished probably by the end of 2019, at which point, it said it will have totally de-risked the project.
“At that point, we will only be three years away from first potash when we think it’s appropriate to make the right kind of cyclical investment,” said Mackenzie in today’s earnings call. “And that’s the big question which will be determined by how it [the market] looks, and we have said today that we will wait at least another couple of years, and if we need to wait longer, we will wait longer.”
BHP says it believes there will be a requirement for some form of new greenfield production “some time” in the 2020s. The mining behemoth on August 22 reported an underlying profit of US$6.73 billion, up from the year-ago US$1.22 billion.