The company building a potash mine southeast of Saskatoon is looking for a partner to dilute their interest in the project.
BHP Billiton released their 2017 financial results Tuesday morning, which included a progress update on the Jansen mine, located about 90 minutes from Saskatoon.
“We are considering multiple options to maximize the value of the Jansen project, including further improvements to capital efficiency, further optimization of design and diluting our interest by bringing in a partner,” the report said.
It adds a board approval vote will only be sought if it “passes our strict capital allocation framework tests.”
While shafts at the project have been safely excavated and lined through to the Blairmore aquifer, the company said it’s now anticipating a “later market window,” which could delay the start of production.
“What we’ve said is the potash market is uncertain and we’re going to take our time to investigate all options to really enhance the returns of the project and make it as investable as possible,” said Giles Hellyer, the president of BHP Potash in Canada.
“We’re looking now to time Jansen just a little bit later than anticipated.”
Hellyer said the company has already invested close to $2.6 billion in the project.
“That is the money we’ve been using to create the infrastructure and put shafts into the ground,” he said, adding about 70 per cent of the work is now complete.
Business News Network analyst Jon Erlichman said Tuesday’s announcement has a lot to do with the pressure BHP has been feeling from investors.
“The wording from the company is very careful. It leaves the door open for them to continue ahead, if they can find the right balance between investors and what the company hoped to do,” Erlichman said.
“Clearly there’s going to be a strong demand for potash going forward, but is that the kind of demand that translates into bottom line results tomorrow. If you have impatient investors and can’t say yes to that, then that puts pressure on you to think about where your company is going.”
The BHP Billiton potash mine is expected to employ between 400 to 600 workers once in operation.
McKenzie had said in May the project could be producing four million tonnes of potash during first production in 2023.
— With files from 650 CKOM’s Chris Carr.