BHP Group Ltd. reported this week that construction of its Jansen Stage 2 (JS2) potash project in Saskatchewan is expected to start in the fourth quarter of its current fiscal year, which ends June 30, 2024.
As previously reported, construction is expected to take approximately six years, with first production expected in FY2029, followed by a three-year ramp-up period. Once fully ramped up, JS2 will provide some 4.36 million mt/y of potassium production capacity.
Jansen Stage 1 (JS1) is now 38% complete (GM Jan. 19, p. 25) and remains on track to deliver first production at the end of calendar year 2026, with a two-year ramp-up period. This first stage will have capacity to produce 4.15 million mt/y of potassium chloride.
BHP said earthworks at JS1 continued during the first half of FY2024, with the concrete foundations for the mill nearing completion. In the second half of FY2024, the group expects to award all remaining major equipment and construction packages for JS1 and said it will continue to progress underground mine construction activities.
The group expects to spend $1.2 billion on Jansen in FY2024, of which $0.53 billion was spent in the first fiscal half year, according to BHP’s first-half FY2024 results, released on Feb. 20. BHP is spending an estimated $5.7 billion on JS1, and last October gave the go-ahead for a further $4.9 billion investment on JS2 (GM Nov. 3, 2023).
BHP’s positive outlook for global potash markets remains intact. It noted that existing operations in Russia and Belarus are now back to around four-fifths of pre-sanction capacity, with global shipments tracking at 93% of calendar year 2020 levels.
In the medium term, the group expects existing capacity in Russia and Belarus to return to normal operating rates but expects new projects in the region to face “significant delays” versus pre-sanction timelines.
Longer term, BHP still sees “a compelling demand picture,” together with rising geopolitical uncertainty and the maturity of the existing asset base, to be “an attractive, accelerated entry opportunity” in a lower-risk supply jurisdiction such as Saskatchewan.
BHP posted a first-half FY2024 underlying attributable profit of $6.6 billion, largely unchanged from a year ago. The group cited strong revenue generation and disciplined cost control. First-half revenue increased by 6%, to $27.2 billion, up from $25.7 billion the previous year.
However, the group reported an exceptional loss related to the Samarco dam failure and impairment of its Western Australia Nickel assets, which decreased attributable profit by $5.6 billion, to $0.9 billion versus the prior year’s $6.5 billion.
BHP declared an interim dividend of US$0.72 per share for the first half of FY2024, compared with $0.90 per share a year earlier.