Nutrien and other rivals get nervous as BHP Billiton eyes $17-billion potash project in Saskatchewan – by Gabriel Friedman (Financial Post – October 18, 2019)

Chuck Magro, chief executive of Saskatoon-based Nutrien Ltd., remained quiet on Thursday after the Australian-based mining giant BHP Billiton Ltd. disclosed its latest plans to build a giant potash mine in his company’s backyard.

BHP announced it would commit an additional US$345 million, on top of roughly $3 billion already spent, to de-risk Jansen, a proposed potash mine east of Saskatoon that could upend the market; and it gave itself until February 2021 to make a final decision on the estimated $17-billion project.

If constructed, Jansen would add about 4.4 million tonnes of potash per year, roughly 7 per cent of the current market, and potentially enough to drive down potash prices and deal a blow to Nutrien, the largest producer in the world. The Saskatoon-based firm’s stock price fell just under a per cent to $64.64 on the Toronto Stock Exchange.

Magro declined to comment, but questions about Jansen have dogged him for months if not years. “I will tell you this, every time that a company has tried to build greenfield potash mines around the world, it has been a very difficult project to create long-term shareholder value,” Magro said in May at the BMO Farm to Market Conference in New York.

In July, Susan Jones, then head of Nutrien’s potash segment, echoed that pessimism, saying on an earnings call that potash prices “need to be significantly higher” to justify building Jansen.

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