THE LEADER VOLUME 16 • NUMBER 9
Potash patience
Editorial Director Paul Moore BSc ( Hons ), MSc Email : paul @ im-mining . com
Editor Daniel Gleeson BA ( Hons ) Email : daniel @ im-mining . com
Advertising Sales : Phil Playle Email : phil @ im-mining . com + 44 ( 0 ) 1442 870 829
Publishing Assistant Lynne Lane Email : lynne @ im-mining . com
Accounts Manager Nicola Shukla nicolas @ im-mining . com
Marketing Assistant Joanna English BA ( Hons ) jo @ im-mining . com
Circulation Assistant Jane Alter circulation @ im-mining . com
Design and Production Trevor Sheldon Email : sheldonmann @ gmail . com
Website : www . im-mining . com
Annual Subscription Enquiries Emma Smith Email : emma @ im-mining . com
Annual Subscription UK and Europe £ 160 , € 230 Rest of the world US $ 270
International Mining ( ISSN No : 1747-146X ) is published monthly by Team Publishing Ltd , GBR and is distributed in the USA by Asendia USA , 17B South Middlesex Avenue , Monroe NJ 08831 and additional mailing offices . Periodicals postage paid at New Brunswick NJ . POSTMASTER : send address changes to International Mining , 17B South Middlesex Avenue , Monroe NJ 08831
Printed by The Manson Group , St Albans , UK
© Team Publishing Ltd 2021 ISSN 1747 -146X
IM uses , as preference , SI units throughout , so , for example , all tonnes are metric unless otherwise stated . All dollars are US unless otherwise stated
BHP ’ s approach to developing the Jansen potash project in Saskatchewan , Canada , has been unorthodox to say the least .
Even before the major miner signed off the $ 5.7 billion of capital expenditure to build the Stage 1 project last month , it had invested $ 4.5 billion ( pre-tax ) in the asset .
BHP has admitted it would not have sunk so much money into Jansen had it been assessing the project in its initial stages today , but the fact it has done so says as much about the company as it does about the dearth of world-class mining projects today .
As the industry is continually being told , there are fewer and fewer Tier 1 assets such as Jansen up for grabs .
While Stage 1 ( S1 ) is expected to produce approximately 4.35 Mt / y of potash , the Jansen asset gives BHP a basin position with the potential for further expansions ( subject to studies and approvals ). This could see output rise to 12 Mt / y from Jansen , making BHP a sizeable potash producer in the process .
The company has , arguably , been after this basin position since it made an audacious bid to gain control of Potash Corp of Saskatchewan in 2010 , knowing that the province was home to one of the premier potash addresses in the world .
While this bid was unsuccessful , it started a love affair with a commodity that has lasted more than a decade .
BHP , blessed with oodles of iron ore , metallurgical coal , petroleum , copper and nickel , has been looking to tie itself to a different commodity growth trajectory . At the same time , it knows the world will need to produce more food , more efficiently over future decades .
Demand for potash has waned since its hostile PotashCorp takeover bid took place , while BHP has bid goodbye and welcomed two different CEOs . Yet , the underlying trend that saw the company go hostile with its PotashCorp advances remains intact .
That is perhaps why the company has been more patient with Jansen than it would have been with any other asset .
The investment to date has included construction of the shafts and associated infrastructure ($ 2.97 billion scope of work ), as well as engineering and procurement activities , and preparation works related to Jansen S1 underground infrastructure . The shafts themselves – a 975 m deep production shaft and 1,005 m service shaft – were sunk by DMC Mining Services using Herrenknecht ’ s Shaft Boring Roadheader technology ( read more about this technology in the Shaft Sinking feature ). This novel cutting innovation came with benefits , as well as the usual drawbacks of employing new technology .
The construction of two shafts and associated infrastructure at the site is 93 % complete and expected to be completed in 2022 , with Cementation Canada set to carry out the post liner excavation , steel and equipping of the shafts .
To date about 50 % of all engineering required for
Jansen S1 has been completed , significantly de-risking the project , BHP said .
First ore is targeted in 2027 , with construction expected to take approximately six years , followed by a ramp-up period of two years .
This timeline puts Jansen smack bang in the middle of period of demand growth , according to Mike Henry , BHP CEO .
“ We anticipate that demand growth will progressively absorb the excess capacity currently present in the industry , with opportunity for new supply expected by the late 2020s or early 2030s ,” he said . “ That is broadly aligned with the expected timing of first production from Jansen .”
And , according to the company , it is assets such as Jansen that will remain resilient throughout the cycles , putting BHP in the driving seat when it comes to term contract negotiations .
It said in that same release : “ Beyond the 2020s , the industry ’ s long run trend prices are expected to be determined by Canadian greenfield solution mines . In addition to consuming more energy and water than conventional mines like Jansen , solution mines tend to have higher operating costs and higher sustaining capital requirements .”
Jansen S1 includes the design , engineering and construction of an underground potash mine and surface infrastructure including a processing facility , a product storage building and a continuous automated rail loading system . Jansen S1 product will be shipped to export markets through Westshore , in Delta , British Columbia , and the project includes funding for the required port infrastructure . This infrastructure will be constructed by Westshore Terminals Investment Corporation as part of an agreement with BHP .
Henry said Jansen is aligned with BHP ’ s strategy of growing the company ’ s exposure to future-facing commodities in world-class assets , which are large , low cost and expandable .
“ This is an important milestone for BHP and an investment in a new commodity that we believe will create value for shareholders for generations ,” he said .
“ In addition to its merits as a stand-alone project , Jansen also brings with it a series of high returning growth options in an attractive investment jurisdiction . In developing the Jansen project , BHP has had ongoing positive engagement and collaboration with First Nations and local communities , and with the provincial and federal governments . Jansen is designed with a focus on sustainability , including being designed for low greenhouse gas emissions and low water consumption .”
Daniel Gleeson Editor daniel @ im-mining . com
SEPTEMBER 2021 | International Mining 3