One shaft at BHP Billiton Ltd.’s giant deposit in Jansen, Sask., reached a depth of 1,005 meters (3,296 feet) on Aug. 18, and the second shaft will reach bottom in the coming days, Giles Hellyer, president of BHP’s Canadian unit, told Bloomberg. He said the move completes a critical excavation phase and is a “very significant” milestone that will unlock capacity options should the Melbourne-based company go ahead with the operation. The progress comes after the miner slowed development on the project following a prolonged slump in fertilizer prices, though the potash market is now in the midst of a rebound.
“Certainly, we have an expectation that markets will come into balance around the mid-to-late 2020s,” said Hellyer, noting that if BHP moves ahead with the Jansen project, it will be operational around the same time. “It’s fair to say the look and feel of the project has changed quite dramatically.”
BHP last year delayed plans to seek board approval for a planned $4.7 billion first phase of the project amid pressure from investors, including activist Elliott Management Corp. The project faces an uncertain future as BHP needs to decide whether to press ahead with development, add a partner, or sell or mothball the mine once the shafts are complete.
In the meantime, BHP has scaled down the project to cut costs and reduce risk, Hellyer said. While Jansen was initially slated to have between 8-10 million mt capacity, it has been reworked to be a “smaller, more nimble” operation, with an initial 4 million mt and the option to expand. The producer will spend about $205 million in fiscal 2018 and another $240 million in fiscal 2019, he said.
“We continue to work on the engineering of the project so that we can improve the returns,” CEO Andrew Mackenzie said on an Aug. 21 conference call. “We’re looking for a partner, which of course could give you early monetization, and we’re watching the market, but not in a hurry to make a decision.”