BHP invests $488M in project
Company building up Jansen location
BY CASSANDRA KYLE, THE STARPHOENIX JUNE 24, 2011 8:12 AM
STORY
BHP Billiton has committed to spending an additional $488 million US at its Jansen potash project
Photograph by: Supplied photo, courtesy BHP Billiton
BHP Billiton Ltd. is investing an additional $488 million US in its Jansen potash project - the next step in developing its potash footprint in the province of Saskatchewan, says a senior executive of the company.
The new capital will be used to develop the Jansen site, but the property 30 minutes east of Lanigan and Humboldt isn't the only potash project that is part of BHP Billiton's long-term plans.
Graham Kerr, outgoing president of the firm's diamonds and specialty products division, said the company's potash holdings at Boulder and Young, as well as Melville, may together contain as much of the valuable mineral as at Jansen.
The Jansen mine could eventually produce eight million tonnes of potash per year.
"If you look at our total land position and the options we have, we certainly believe we have the option to take the business overall to the 16-million-tonne mark (annually) if not more," Kerr said.
Jansen remains a priority for BHP Billiton, which, including the new money, has invested $1.2 billion US in the project.
The $488 million US - in what it calls precommitment capital - will be used to prepare the site and buy equipment for the proposed mine.
The funds will also allow the firm to develop the first 350 metres of underground production and service shafts at the site should it receive the necessary approvals from the provincial government, which Kerr said the company hopes to receive by the end of the year.
BHP Billiton's board is expected to make a production decision for Jansen in 2012.
If the board gives Jansen the green light, the firm could start producing potash from a reserve of 3.37 billion tonnes in 2015. It's estimated that mine construction at Jansen would cost $12 billion.
Although much of the focus is on Jansen, work is also underway at the mining giant's Boulder, Young and Melville sites to determine how much potash lies 1,000 metres underground.
"Between the combination of the areas of Melville, Boulder and Young, we do think there's eight million tonnes and more out there that we would be interested in taking," Kerr said.
"We're not quite sure the size of each of them yet because we've got more work to do, but we're certainly confident about what we could do in the long-term in those areas."
The executive explained the company likes to work in "basin plays" where several operations located in the same region share transportation infrastructure. He sees BHP Billiton operating in such a way in Saskatchewan's potash belt with potential mines at Jansen, Melville and Boulder/Young.
"Certainly our planning in Saskatchewan would be to do multiple mines linked by the infrastructure of the rail and the port to get it to the customers," he said.
BHP Billiton's interest in the province's potash reserves received international attention last year when it tried, and failed, to acquire PotashCorp. of Saskatchewan Inc. for $38.6 billion.
Premier Brad Wall said Thursday the new investment was a tribute to BHP Billiton's commitment to Saskatchewan even after the rejection of its bid for PotashCorp.
He called the company an "excellent corporate citizen" who has been "great to deal with."
"Throughout all of the stages of this project they have continued to make significant investments in our province. This will one day end up as the largest potash mine in the world," he said of Jansen, adding that the government welcomed the jobs that will be created by the project.
Wall also slammed the Opposition NDP, saying its proposal to raise potash royalty rates would curtail projects such as BHP Billiton's.
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