SASKATOON — Australian mining giant BHP Group says it has approved $7.5 billion in capital spending to build its Jansen potash project in Saskatchewan.
“This is an important milestone for BHP and an investment in a new commodity that we believe will create value for shareholders for generations,” BHP CEO Mike Henry said in a statement.
“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.”
The decision came as BHP announced a plan to merge its oil and gas operations with Woodside Petroleum Ltd. and reported its latest quarterly results.
The long-delayed project, located about 140 kilometres east of Saskatoon, is expected to produce about 4.35 million tonnes of potash per year with the potential for further expansions.
It includes construction of an underground mine and surface infrastructure including a processing facility, a product storage building and a rail loading system.
BHP also said it has signed a deal with Westshore Terminals in Delta, B.C., to handle the potash that will be shipped to export markets.
Construction of the mine is expected to take about six years, with first ore in 2027, followed by a ramp-up period of two years.
BHP said it expects demand growth for the light-coloured mineral, which is used as a crop fertilizer, will progressively absorb the excess capacity currently present in the industry.
It said there is an opportunity for new supply expected by the late 2020s or early 2030s.
Ahead of the decision, BHP had already spent billions on the Jansen project including the construction of two mine shafts that are nearly complete.
This report by The Canadian Press was first published Aug. 17, 2021.