One shaft at BHP Billiton’s giant deposit in Saskatchewan reached a depth of 1,005 meters (3,296 feet) on August 18, and the second shaft will reach bottom in the coming days, said Giles Hellyer, president of BHP’s Canadian unit.
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, Hellyer said.
The progress comes after the miner slowed development on the project following a prolonged slump in fertiliser prices. The potash market is now in the midst of a rebound, with US spot prices increasing 15% this year as new capacity has come on at a slower-than-expected pace amid increased demand.
“Certainly, we have an expectation that markets will come into balance around the mid-to-late 2020s,” Hellyer said in a telephone interview from Saskatoon, Saskatchewan, 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 $4.7bn first phase of the project amid pressure from investors including activist Elliott Management Corp. The entire project could have a total cost of almost $13bn, Deutsche Bank AG said in a July 2017 note.
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, UBS Group AG analysts cited chairman Ken MacKenzie as telling a meeting last month. BHP declined to comment.
“We continue to work on the engineering of the project so that we can improve the returns,” chief executive officer Andrew Mackenzie said on a conference call earlier this week.
“We’re looking for a partner, which of course could give you early monetisation, and we’re watching the market, but not in a hurry to make a decision.” BHP has scaled down the project to cut costs and reduce risk, Hellyer said.
While Jansen was initially slated to have between 8mn and 10mn tonnes capacity, it’s been reworked to be a “smaller, more nimble” operation with an initial 4mns tonnes and the option to expand, he said. The producer will spend about $205mn in fiscal 2018 and another $240mn in fiscal 2019, he said.
BHP Billiton headquarters in Melbourne. The world’s biggest mining company has made “significant” progress in the development of its multi-billion dollar Canadian potash project that may end up being mothballed.
