BHP has agreed to invest another $4.9 billion in the Jansen potash project in Saskatchewan, Canada, an investment that will bring on stage two of the project, expected to double production capacity to some 8.5 Mt/y.
This follows BHP’s approval of $5.7 billion for stage one of the Jansen potash project in August 2021 and a pre-Jansen Stage 1 investment of $4.5 billion.
BHP Chief Executive Officer, Mike Henry, said: “The stage two investment advances BHP’s strategy to increase its exposure to commodities positively leveraged to the global megatrends of population growth, urbanisation, rising living standards and decarbonisation. Potash, used in fertilisers, will be essential for food security and more sustainable farming.
“Today’s additional investment will transform Jansen into one of the world’s largest potash mines, doubling production capacity to approximately 8.5 Mt per annum.
“We are advancing our sustainability and economic development priorities for Jansen and we are pleased with the progress of our ongoing work with the Governments of Canada and Saskatchewan, as well as local and Indigenous communities on shared solutions.”
Jansen Stage 1 is 32% complete and progressing in line with its schedule. First production from Jansen Stage 1 is expected to be delivered in late 2026. Construction of Jansen Stage 2 is anticipated to take approximately six years, and is expected to deliver first production in the 2029 financial year, followed by a ramp up period of three years.
Jansen Stage 2 is expected to deliver approximately 4.36 Mt/y of production at a capital intensity of approximately $1,050/t, lower than Jansen Stage 1, due to the leveraging of existing and planned infrastructure2. In October 2022, BHP approved an initial funding commitment of $188 million to procure long-lead equipment and commence process plant foundation works. The additional $4.9 billion investment for Jansen Stage 2 will be used for the development of additional mining districts, completion of the second shaft hoist infrastructure to handle higher mining volumes, expansion of processing facilities and the addition of more rail cars.
Westshore Terminals, in Delta, British Columbia, remains BHP’s main port facility to ship potash from Jansen to customers. The Jansen Stage 2 investment includes funding to increase storage facilities at the port. BHP will not be initiating a formal capacity extension for the Westshore port terminal at this time and will evaluate closer to Jansen Stage 2 reaching first production.
Jansen has been designed with a focus on social value and sustainability and is expected to have approximately 50% less operational (Scopes 1 and 2) greenhouse gas emissions per tonne of product and use up to 60% less fresh water when compared with the average potash mine in Saskatchewan, the company says. Indigenous employee representation at Jansen has increased to approximately 9% with a target to increase Indigenous employee representation at Jansen to 20%. Jansen aspires to maintain a gender balanced workforce.
Jansen Stage 2 was evaluated utilising BHP’s Capital Allocation Framework and at consensus prices has an internal rate of return of 15-18% and an expected payback period of approximately six years from first production.
Transitioning to Jansen Stage 2 during the construction period of Jansen Stage 1 is expected to bring a number of operational benefits. These include leveraging the experience of the integrated Jansen project team, continued use of existing contractors, reduced overheads and savings on mobilisation and demobilisation costs. Potential synergies of $300 million have been embedded into Jansen Stage 2’s economics.
Longer term, Jansen has the potential for two additional expansions to reach an ultimate production capacity of 16-17 Mt/y (subject to studies and approvals).