BHP Billiton moves ahead at Canadian potash mine

October 30, 2012

BHP Billiton continues to press forward with its Jansen potash mine in Saskatchewan.

When completed, the Jansen Mine will produce between 8-10 Mt/a (8.8 million and 11 million stpy), making it the largest potash mine in the world.

“We believe there is room in the market for the current producers, the brownfield expansions and then probably just a few new green-field expansions,” Tim Cutt, president of BHP Billiton Diamonds & Specialty Products told Saskatchewan’s StarPhoenix.

A BMO Capital Markets report said BHP should delay the Jansen project, and instead go after buying U.S. potash producer Mosaic Co.

“We don’t really react directly to analysts reports,” Cutt said. “We believe in the basic fundamentals of potash and the long-term viability. It’s our job to build a mine that is going to be low on the cost curve and very competitive.”

BHP Billiton has already committed $2 billion to the potash business in Saskatchewan.

With about 400 workers on site, work at the mine site continues at a rapid pace about 140 km (87 miles) east of Saskatoon. During the day, a truckload of gravel arrives every three minutes at the site as part of the construction process.

The mine has just received an Herrenknecht tunnel boring machines that will drill the hole to create the mine. While drilling is due to start in the next couple of weeks, it will take the Herrenknecht a year to reach the potash supply about 1 km (0.6 miles) underground.

Then, it will be another two to three years before potash will make it above ground.

“We think by the end of 2015, we should be in the ore body and starting to build the production rooms,” said Cutt.

The mine itself, will have a huge underground presence.

“The footprint underground that we’ll mine actually is about 18-20-km- (11-12-miles) wide and about 30-km- (18-miles-) long,” he said.
Discovery Lodge, a massive on-site housing facility for construction workers built of modular trailers by Atco Structures & Logistics, will see its first 500 beds in place by December.

In total Discovery Lodge will have 2,586 rooms, all with private bathrooms, and include a kitchen, rec rooms, a full gymnasium, laundry facilities, a skating rink and a theater.

Cutt said there has been a steady three percent increase in potash demand for the past number of years, and he expects that to continue.
“The math for potash is fantastic,” Cutt said. “We believe there is room for new entrants into the potash market.”



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