BHP Ltd., Melbourne, this week said its Jansen Stage 1 potash project in Saskatchewan remains on track to be presented to the BHP Board for a final Investment decision in the middle of the 2021 calendar year.
“Potash is an opportunity in a commodity we like,” CEO Mike Henry reiterated to analysts at a group earnings call on Feb.16, reminding everyone that the nutrient is “well-placed” to benefit from the world’s population growth and changing diets.
BHP’s view of the trend demand growth for potash remains unchanged. In its latest Commodities Outlook, reported as part of its fiscal first-half financial results statement this week, the group anticipates trend demand growth in potash of 1.5 to 2.0 million mt/y (between two and three percent per annum) through the 2020s. This rate of growth, it believes, would “progressively absorb the excess capacity currently present in the industry, with opportunity for new supply expected by the late 2020s or early 2030s.”
The mining group estimates producer sales of potash hit a record 79 million mt annualized in the June quarter of 2020, noting this halted “the downtrend in price of the prior twelve months that was exacerbated by the pandemic,” with robust demand carried over into subsequent quarters.
BHP’s aspiration to diversify into what it what it calls “future-facing” commodities might suggest it will green light the Jansen potash project when it is presented to the board in mid-2021, according to a Dow Jones Newswire report this week, citing UBS. Potash prices remain at soft levels “that could challenge the economics of the project,” UBS believes, but predicts BHP might pursue Jansen “as an avenue for growth.”
BHP’s current investment program to complete the shafts at Jansen was reported as 89 percent complete in January (GM Jan. 22, p. 31). Under current plans, Jansen Stage 1 will provide between 4.3-4.5 million mt/y of potassium chloride production capacity on completion. As previously indicated, the group puts the required capex for Stage 1 at between US$5.3-$5.7 billion, anticipates a five-year construction timeframe, and sees around two years from first production to full capacity ramp-up.