{"id":1133618,"date":"2019-08-20T12:22:50","date_gmt":"2019-08-20T17:22:50","guid":{"rendered":"https:\/\/www.mining.com\/?p=999736"},"modified":"2019-08-20T12:22:50","modified_gmt":"2019-08-20T17:22:50","slug":"bhps-potash-price-outlook-dims-jansen-hopes","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1133618","title":{"rendered":"BHP\u2019s potash price outlook dims Jansen hopes"},"content":{"rendered":"<p>Earlier this year BHP admitted to institutional investors it \u201coverinvested\u201d in its Jansen potash project in Saskatchewan where the Anglo-Australian giant has already spent nearly $3B over six years.<\/p>\n<div class='d-flex justify-content-center'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>BHP&#8217;s commodity outlook accompanying its <a href=\"https:\/\/www.mining.com\/web\/bhp-reports-2-decline-in-annual-profit-pays-record-dividend\/\">bumper annual results<\/a> released on Monday seems to indicate the world&#8217;s largest mining company will continue to be cautious about advancing the project.<\/p>\n<p>The global potash market of around 65m tonnes per year has rallied since mid-2016, boosted in part by idled capacity in North America and robust demand from Brazil and China. <\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p>The global potash market of around 65m tonnes per year has rallied since mid-2016. <\/p>\n<\/blockquote>\n<\/figure>\n<p>But BHP now sees slowing momentum for the crop nutrient with demand growing by a an uninspiring 2\u20133% or 1.5\u20132m tonnes a year through the 2020s despite supportive global trends of rising population, changing diets and the need for &#8220;sustainable intensification of agriculture&#8221;. <\/p>\n<p>BHP is spending a higher than expected $8 billion on capital projects this year, but in an analysts debriefing Peter Beaven, BHP CFO, said there will be &#8220;a relatively small spend in the scheme of things, on Jansen.&#8221; CEO Andrew Mackenzie added that Jansen is a project &#8220;that\u2019s relatively backend loaded in terms of costs, which gives us some of the flexibility&#8221;. <\/p>\n<p> That &#8220;flexibility&#8221; on capex could extend more than a decade into the future according to BHP&#8217;s <a href=\"https:\/\/www.bhp.com\/media-and-insights\/prospects\/2019\/08\/bhps-economic-and-commodity-outlook#potash\">outlook for potash<\/a>:<\/p>\n<blockquote class=\"wp-block-quote\">\n<p><em>Our low case for potash is predicated on all presently latent capacity returning to the market at disruptive speed; considerable brownfield and greenfield additions coming to market; a low case macro environment curbing both opex and capex costs; \u2018cheap\u2019 currencies in major producer jurisdictions; a five percentage lift in crop residue recycling; minimal dietary change and crop mix; and a similar end\u2013state for soil K mining to what is observed today. All of which serves to delay market balance and the onset of inducement pricing to well beyond the 2020s.\u00a0<\/em><\/p>\n<p><cite>BHP Economic and Commodity Outlook \u2013 20 August 2019<\/cite><\/p><\/blockquote>\n<h2>Capex costs <\/h2>\n<p>Two shafts have been sunk at Jansen, but BHP will have to invest another $5.3\u2013$5.7B to finish phase one construction of the mine which the company said would take fewer than 5 years to complete. BHP has in the past said it would consider selling a stake in Jansen to share capital and risk.<\/p>\n<p>BHP says it can produce potash for around $100 a tonne at the mine. In July benchmark pricing at the port of Vancouver were up 14% year on year to $266 a tonne (mid-point FOB standard grade). That compares to around $400 a tonne when Jansen was first conceived and record highs more than a decade ago of $870 per tonne.<\/p>\n<p>The deposit can accommodate another three phases \u2013 at $4B per phase \u2013 that would lift annual capacity to more than 16m tonnes per year, vastly improving the economics of the project.<\/p>\n<p>BHP has long been eager to enter the potash market in Saskatchewan, diversifying its asset base now concentrated around iron ore and copper since disposing of its US oil assets a year ago.<\/p>\n<p>In 2010, Canada blocked BHP\u2019s $40 billion hostile takeover bid for Potash Corp (now Nutrien after merger with Agrium) arguing the company\u2019s mines are strategic national assets.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>BHP says onset of inducement pricing for new potash projects have been extended to &#8220;well beyond the 2020s.&#8221;<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2849,369,2640],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1133618"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1133618"}],"version-history":[{"count":4,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1133618\/revisions"}],"predecessor-version":[{"id":1133635,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1133618\/revisions\/1133635"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1133618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1133618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1133618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}