BHP Billiton reports that it will continue to invest in the Jansen Potash project in Saskatchewan by investing US$2.6 billion to finish the excavation and lining of production and service shafts, and to continue the installation of essential surface infrastructure and utilities. This investment will be spread over a number of years, with completion of both shafts expected during the 2016 calendar year, while the associated works program will extend into the 2017 calendar year.
BHP said the longer term outlook for potash is strong. BHP assumes a shift away from the current marketing dynamic and believes the potash price will ultimately reflect the cost of adding new supply.
BHP says Jansen is the world’s best undeveloped potash resource and is capable of supporting a mine with annual capacity of ten million mt for more than 50 years. It says with economies of scale and the use of modern mining techniques, Jansen is likely to be one of the lowest cost sources of supply once fully developed. The successful excavation and lining of both shafts will substantially reduce development risk and allow the company to time first production to meet growth in market demand.
“Annual investment at Jansen of approximately $800 million will form an important part of the Group’s capital and exploration budget, which will decline to approximately US$16 billion this year,” said BHP CEO Andrew Mackenzie. “Continued development of the shafts reflects our confidence in the quality of our 5.3 billion mt measured resource and the compelling long term fundamentals of the potash industry. “Investment at Jansen is creating a valuable asset and we will continue to pursue a development path that maximizes returns for shareholders. In time, this may include the introduction of one or more partners, consistent with our approach for other major operations.”