BHP Billiton Ltd., the world’s biggest mining company, said prospective partners for its proposed Jansen potash mine in Canada may be deterred by current market conditions for the crop nutrient.
While BHP would like a partner to help develop the project, “we are not in a hurry and we have to take account of how current market conditions have perhaps made some of the potential partners less interested than they might have been,” Chief Executive Officer Andrew MacKenzie told reporters in London today. “It’s a long-term game for us.”
The global potash market has been in flux over the past year after Russia’s OAO Uralkali, the biggest producer, quit a marketing joint venture with Belarus. The move sent the price of the commodity and shares of producers plunging and prompted output cuts in Canada.
Jansen, located in the Canadian province of Saskatchewan, may cost $16 billion to develop, Citigroup Inc. analysts have estimated. Melbourne-based BHP said in April it’s cutting spending on Jansen by about 25 percent. MacKenzie said today that construction of a mine shaft at the site is proceeding, albeit at a reduced pace.
“We are just taking our time in derisking this project by steadily but surely building the shaft,” he said. “Then we will decide the pace of further investment, and clearly with increased certainty, whether it’s in the market or the shaft becomes more complete, we expect potential interest from others.”
The CEO spoke after BHP reported full-year earnings and announced a plan to spin off aluminum, coal and silver assets. The company said it’s prioritizing iron ore, copper, coal and petroleum, and has identified potash as a potential fifth unit.
Potash is a fertilizer that strengthens plant roots and improves their resistance to drought.