Market Woes May Sideline BHP’s Jansen Potash Project
"If the market is not going to be ready in three years, we could possibly mothball the shafts, once we have completed them and properly lined them," BHP chief executive Andrew Mackenzie said.
The downturn in the global potash market has put the development of the Jansen mine in question, delaying what would be the world's largest operation at an estimated 8mn t/yr MOP production capacity.
BHP has already intentionally slowed progress in an effort to sync the mine's commissioning with favorable market conditions. The project has made some progress, now sitting at 60pc complete.
In March, BHP lowered the project's annual development and feasibility study budget by $130mn-200mn to cut costs and prolong the mine's construction. The project has already surpassed its expected completion date of 2015 and is in its sixth year of development.
Mackenzie said there is also a possibility of downsizing the initial scope of the mine to make the project more appealing to investors.
The Jansen project, if fully materialized, has the potential to produce 19pc of North America's total potash output, based on current capacities, and shift the balance of the global and North American potash markets.