BHP is doubling down on potash with its Jansen project in Canada, a move that signals its commitment to long-term diversification beyond iron ore and copper.
While some shareholders question the timing, amidst perceptions that potash is an “oversupplied and political” market, BHP remains confident that the commodity will be a game-changing addition to the company’s portfolio.
“Think of this as a long-life, multi-decade asset, which through the cycle, due to its position at the low end of the cost curve, will be a fantastic asset, almost like iron ore,” BHP chief financial officer Vandita Pant said.
“Over five years, we will have the 8.5 million tonnes coming to the market, and we have been very thoughtful about how to make sure the product placement risk is fully mitigated.”
Pant said BHP had executed multiple memoranda of understanding with potash buyers, with 100 per cent of offtake for the first and second phases of the mine, i.e. Jansen 1 and Jansen 2, secured with customers globally.
BHP chief executive officer Mike Henry said the company is sitting on the world’s best potash resources.
“(It’s) going to allow us to become one of the world’s largest producers of this commodity,” he said.
“By early next decade, we’re going to be sitting at the very low end of the cost curve, and that means that we’re going to be able to generate really healthy returns and value for shareholders for many, many years to come.”
BHP has already committed more than $US10 billion to Jansen, with first production expected in 2026. The company believes the investment will pay off as global potash supply tightens.
Henry said Jansen is not just about diversification; it’s about ensuring BHP remains a leader in supplying critical resources.
“Potash provides us with a commodity that is less volatile than others … and has strong, long-term fundamentals,” he said.
While iron ore and copper remain BHP’s core commodities, potash is seen as a hedge against downturns in those markets.
BHP believes potash has a strong future in supporting global food security by providing a vital nutrient for plant growth and crop yield.
The company’s belief in potash is akin to its enthusiasm for copper, which it sees as playing an integral role in the clean-energy transition.
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