ATCO Structures & Logistics Ltd., Calgary, said March 5 that it has been awarded a multimillion-dollar contract to design, build, and operate a 2,586-person turnkey workforce housing lodge for BHP Billiton’s Jansen Potash Project, 100 km north of Regina. It said the accommodation facility is the largest Canadian contract in ATCO’s history.
While BHP has already spent a lot of money on the Jansen project, its board of directors is yet to give it final approval. Recently, analysts, citing BHP’s earnings call, speculated that Jansen had become the lowest priority on BHP’s capital expenditures list, and as a result, might not be approved. The company denied this assessment.
In the meantime, competitors continue to put doubt on this and other greenfield projects. “Greenfield investments in potash are not a sure bet,” James Prokopanko, The Mosaic Co. president and CEO, recently told analysts. “Brownfields are beginning to come online, and will strengthen the hand of today’s leading producers.” He said as new potash comes online, it will undermine the economics of greenfields. “I expect overall, P&K prices to continue to be cyclical, with higher lows and higher highs driven by re-inflation of the dollar, tight grain and oilseed supplies, and the need for economic returns to justify capital investment in new production.”
Prokopanko said that while capital costs of Mosaic’s brownfield expansions could be in the range of $1,000 per capacity ton, an equivalent for greenfields could be as much as double or more that amount. Prokopanko believes it would go as high as $2,500 per capacity ton. He says such a facility would take seven years to construct – six tops – and that those figures do not include infrastructure and port facilities. He also said to justify a greenfield the potash price would have to be north of $600/mt at the mine.
Add to this, say sources, inflation and a tight labor market in Saskatchewan.
As for the ATCO-BHP project, ATCO says the core building includes a 1,200-person dining room, a separate private dining area, lounge, library, convenience store, medical centre, and full laundry service. Fireplaces located throughout the facility will provide a warm, comfortable setting. The two-story accommodation wings are connected by arctic corridors and feature 160 sq. ft. bedrooms with private washrooms. Each room will include a flatscreen TV, phone, and wireless internet capabilities. The first phase, comprising 500 rooms, will be operational in October 2012, with completion of the full 2,586-room camp and facilities scheduled for mid-2013.
ATCO said the facility features diverse, high-end amenities including two pre-engineered buildings, a 20,000 sq. ft. sports complex with gymnasium, squash courts, weight room, and a raised running track that overlooks the gym. A recreational director will organize fitness programs. A separate pre-engineered building will house a 200-seat movie theatre.
ATCO has partnered with Aboriginal groups in the Touchwood Hills area of Saskatchewan, including the George Gordon First Nation, Day Star First Nation, and Kawacatoose First Nation. An employment and training center will be established on First Nation traditional territory.
ATCO says it offers modular buildings, site services, and industrial noise control solutions worldwide. With manufacturing facilities in North America, South America, and Australia, and operations on five continents, the company has the expertise to deliver a rapid, turnkey solution anywhere it is needed.