The prospects for potash fertilizer demand are promising, and BHP is accelerating the Jansen potash project.
Last week, in the international potash market, Brazil ended its 5-week rise, demand slowed down, and the price of large-grain potassium chloride landed was lowered. The US import demand for the fourth quarter is positive, and prices are still rising. In other markets, potassium chloride prices remained stable. Limited potassium sulfate supplies in China and Egypt have pushed up prices in East Asia, and market sentiment is bullish. Before the autumn application season, US demand continues to rise, and the need to replenish stocks has driven up recent potassium chloride prices.
BHP, the world's largest mining company by market value, has completed 26% of its first phase of the 4.35 million tons/year Jansen potash project (Janesen) and is expected to start production in 2026. If a final investment decision is made in 2024, the company's 4 million tons/year second phase project may start production in 2029.
It is reported that although the price of potash fertilizer has fallen by more than a third this year, BHP's capital expenditure on the Jansen potash project in Saskatchewan increased by 55% this year.
The company's potash division stated that due to the plan to start mining at the end of 2026, ahead of the previous 2027, the construction expenditure of the mine located 180 kilometers north of Regina has increased from 647 million US dollars to 1 billion US dollars. Currently, the first phase of Jansen, which cost 5.7 billion US dollars, has been completed 26%, and will produce 4.4 million tons annually upon completion.
Currently, BHP is developing potash production in Canada, the world's largest producer of fertilizer raw materials. Due to the Ukraine crisis, the market has adjusted its import restrictions on the top five producing countries: Russia, Belarus, and Ukraine. Although Belarus has lowered potash prices due to sanctions, the country's potash exports have been increasing recently.
The spot price of potash has dropped from a record high of over $800 per ton in November last year to about $340 per ton in July this year. In August, Nutrien, headquartered in Saskatchewan, indefinitely postponed its plan to increase annual potash production capacity to 18 million tons. Nutrien is the world's largest potash producer, with a production of 13 million tons last year.
BHP stated that its potash outlook is measured in decades rather than years. Although the Ukraine crisis may have a lingering impact, BHP expects potash demand to grow at a rate of 3% per year in the coming years.
Huw McKay, Vice President of Market Analysis and Economics, recently stated in a bulk commodity outlook: "In the long run, we believe that potash is a forward-looking bulk commodity with attractive fundamentals." Potash demand will benefit from the intersection of global mega-trends: population growth, dietary changes, and the need for sustainable intensification of agriculture.
