The Jansen potash mine near Saskatoon, Canada could go into production by 2023 if BHP Billiton’s board of directors approves the project next summer.
The Saskatoon Star Phoenix reported that analysts have estimated the mine will cost US$14 billion. For the first time the company provided a potential timeline for the project when BHP Billiton CEO Andrew Mackenzie told a global mining, metals and steel conference in Barcelona, Spain that the mine’s first phase could be up and running within six years.
“As we currently see it, we’re looking at a phased expansion into Jansen with an initial stage of 4Mt/a (4.4 million stpy), and that will generate competitive returns,” Mackenzie told the conference.
BHP has to date committed a total of US$3.8 billion to the project southeast of Humboldt, of which US$2.6 billion is being spent to sink a pair of kilometre-deep mine shafts. Further expenditures must be authorized by the board.
The company announced that it expects to spend another US$4.7 billion to bring the mine’s first phase into production.
“As we progress this project we continue to optimize the development path as to how we might add a mine to those shafts so we can reduce risk and unlock value,” Mackenzie said.
BHP has over the last several years approached what could become the province’s 11th operational potash mine with caution, largely due to global supply outstripping demand and causing prices to fall.
Crumbling prices have forced other producers to cut costs and shift their operations toward recently-expanded mines with lower production costs: Rocanville for Potash Corp. of Saskatchewan Inc. and Esterhazy for Mosaic Co.
BHP Billiton is not in a position to reveal its operational cost estimates but expects Jansen to run “at the low end of the cost curve for Saskatchewan,” said Chris Ryder, the company’s head of corporate affairs in Canada.
Ryder emphasized that the 2023 production start date, which would be followed by a gradual ramp-up, is an estimate contingent on the completion of an ongoing feasibility study and approval from the company’s directors.
Mackenzie said last year that the company could “mothball” the Jansen project — which could, if fully operational, produce 15 per cent of current global supply — if more potash is not needed immediately.
“We will only develop when the time is right,” he said.