The world’s biggest mining company says it is still keen to build the world’s biggest potash mine, despite a severe bear market in the crop nutrient. But it sure doesn’t seem to be in a hurry.
Andrew Mackenzie, BHP Billiton Ltd.’s chief executive, told investors on Tuesday that he doesn’t expect the potash market to make a serious recovery until the early 2020s. “It’s a long way off,” he said on a conference call to discuss half-year earnings.
Melbourne, Australia-based BHP is in the midst of a US$2.6-billion investment to build production shafts at its Jansen project in Saskatchewan. Jansen would be a game-changer in the industry, as BHP is aiming to produce eight million tonnes of potash a year, which would amount to nearly 15 per cent of global supply.
However, it will require many more billions of dollars to actually bring the project to production. Analysts and investors are skeptical that BHP’s board will approve Jansen anytime soon, or indeed if it ever will. At current potash prices, nobody thinks the mine makes sense.
Mackenzie said BHP is moving at a “relatively slow rate” at Jansen, and will probably not be ready for a push to production until the potash market recovers. Given that BHP doesn’t see that happening until the 2020s, production remains a long way away.
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