BHP’s US$14B Saskatchewan mine delay comes amid dark outlook for potash producers – by Jesse Snyder (Financial Post -August 23, 2017)

BHP Billiton Ltd.’s decision to delay a major potash mine in Saskatchewan comes amid a persistent weakening of demand for fertilizer, leading producers to shelve major investments and ink sizeable mergers with competitors to boost revenues.

On Tuesday, Melbourne-based BHP announced it would delay its multi-billion dollar Jansen potash mine, located about 150 kilometres east of Saskatoon. Analysts estimate the project could cost as much as US$14 billion to complete.

The decision comes amid a shaky outlook for Canadian potash producers, who have been forced to scale back major mining developments in the face of low commodity prices. It will also delay BHP’s entrance into the potash sector, as the company faces intense pressure from activist hedge fund Elliott Management Corp. to shed some of its underperforming assets.

The Anglo-Australian mining behemoth has been gradually working to complete the remaining mine shafts at Jansen, part of its current US$2.6 billion spending plan on the project. The company says it has already sunk US$3.8 billion into the mine.

But the pace of construction has been slow, with analysts and investors questioning the long-term viability of the project. “The project needs a lot higher pricing to make sense,” said Fai Lee, an analyst at Odlum Brown Limited.

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