BHP eyes potash business

BHP eyes potash business

Work is continuing at the massive proposed potash mine project in Jansen. Despite not yet having final approval from their Board of directors, BHP has already invested $1 billion in the site.

Two giant boring machines will burrow twin shafts one kilometer deep into the earth, allowing access to one of the largest potash deposits on the planet. Tim Cutt, the president of BHP’s Diamonds and Special Products Division, says it is not a simple task and the mine is at least three years away from being operational.

“We think by the end of 2015 we should be in the ore body and starting to build production rooms.”

The two shafts will be sunk using only machines, which is a first for any potash mine. Gord Graham, the mine’s Director of Sub-Surface Operations, says the technique will remove some element of danger.

"What makes it safer very specifically is that we don't have a group of people down in the bottom changing bales on buckets, loading blast holes, being down there with all that activity and hydraulic equipment down there."

BHP is the world’s largest mining company but this is their first foray into the potash business and they are heavily invested.

“We’ve spent about a billion dollars on acreage and exploration,” Cutt says, “And we’ve spent about a billion dollars to get to the point that you see today.”

A recent report from financial analysts at BMO suggests there is no room in the potash market for a mine of this size. But BHP executives disagree.

"You know, we don't really react directly to analysts reports,” says Cutt, “We fundamentally believe in the basic fundamentals of potash and the long term viability of potash. It's our job to build a mine that's going to be low on the cost-curve and very competitive."

The mine will employ 2500 people during the construction phase and up to 1000 permanent employees when operating at full capacity. Malcolm Eaton is the Mayor of the nearby town of Humboldt. He says local communities are excited about the mine but says the prospect of rapid growth can also be overwhelming at times.

"There's an awful lot of planning work and it's difficult work because you're trying to look 10, 15, 20 years down the road at what the needs of the community might be."

Even as they push ahead with major excavation at the site, mine executives say they will not be seeking final approval from their board for the $12 billion project until the next fiscal year at the earliest.