Global mining giant BHP Billiton has resumed excavation work it put on hold late last year at its potash mining project in Saskatchewan — but plans to pace its dig to best meet market demand.
The Australian/British company on Wednesday released its operational review for the nine months ending March 31, in which it reported resuming the shaft excavation it paused in December following a “thorough review of the activities completed to date” at its site at Jansen, Sask., about 70 km southeast of Humboldt. [Related story]
Learnings from the review “are being adopted,” Billiton said Wednesday, “as we continue to progress the production and service shafts in a staggered manner to mitigate risk and optimize their development.
“With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to modulate the pace of development as we seek to time our entrance to meet market demand, thereby maximizing shareholder returns.”
Billiton budgeted US$2.6 billion to finish excavation and lining of its production and service shafts at Jansen and to continue installing “essential surface infrastructure and utilities.”
The project remains on budget and is now 25 per cent complete, the company said Wednesday.
Given its “measured approach,” Billiton said, its outlay in fiscal 2014 is now expected to be about 25 per cent below earlier guidance of US$800 million.
“While the shafts are no longer expected to be completed in the previously defined timeframe, this does not affect our US$2.6 billion budget or longer-term development plans as the shafts are not on the critical path,” the company said.
Based on its current projections for market demand, Billiton said it now expects a Jansen mine could ramp up to its “theoretical design capacity” of about 10 million tonnes per year in the decade beyond 2020.
The company on Wednesday reiterated its belief that Jansen is “the world’s best undeveloped potash resource” and “likely to be one of the lowest-cost sources of supply once fully developed.”
Investment in Jansen “could underpin a potential fifth pillar of BHP Billiton, given the opportunity to develop a multi-decade, multi-mine basin in Saskatchewan.” Billiton today lists the four pillars of its business as iron ore, coal, copper and petroleum.
The company’s play in Saskatchewan is being watched by other potash and fertilizer firms, which have been able to market their product, mined mainly in the same province, well above its cost of production. Billiton has said its projections for Jansen assume “a shift away from the current marketing dynamic.” — AGCanada.com Network