BHP to invest $4.9 billion in Jansen potash project in Canada
By Rishav Chatterjee
(Reuters) -Global miner BHP Group said on Tuesday it would invest $4.9 billion in stage two of its Jansen potash project in Canada to double capacity by the end of the decade.
The world's biggest listed miner has picked potash, used in fertilisers, as one of its pillars of future growth, betting that it would be essential for food security and more sustainable farming.
It is one of the miner's biggest-ever capital investments. It comes amid a slump in commodity prices and ahead of the miner's annual general meeting on Wednesday.
"This is an important milestone... and marks the next phase of the company's growth in Canada," CEO Mike Henry said in a statement.
The first stage of the project is 32% complete and progressing as per schedule, said BHP. It expects the second stage to take six years, with production of about 8.5 million tonnes per annum (mtpa) in late fiscal 2029.
The additional investment will be used to develop further mining districts, expand processing facilities and add more rail cars, among other uses, BHP said.
BHP sunk $4.5 billion into the potash project in Saskatchewan before it approved stage one. It pulled the trigger on an additional $5.7 billion capital investment for stage one in 2021.
BHP is building its first potash mine in the backyard of the world's largest potash fertilizer producer, Canada's Nutrien.
BHP had held talks with Nutrien in 2021 around a possible joint venture on its Jansen project but later decided to go ahead with the $7.5 billion potash project by itself.
It expects the second stage to produce about 4.36 mtpa at a capital intensity of about $1,050/tonne, in line with its strategy to invest in large deposits that have high barriers to entry and offer strong margins.
"Underlying EBITDA margins for Jansen Stage 1 and Stage 2 are about 65% to 70% due to a low cost position of $105 to $120/tonne," BHP said.
In the long term, Jansen has the potential for two additional expansions to reach an ultimate production capacity of 16-17 mtpa.
(Reporting by Rishav Chatterjee in Bengaluru; Editing by Savio D'Souza, Rashmi Aich and Shilpi Majumdar)
