Anglo-Australian mining giant BHP Billiton may put the
completion of its Jansen potash mine in Saskatchewan, Canada
on hold, the company told IM.
The mine is anticipated to have an annual potash output of
8-10m tpa once the infrastructure and production facilities
are completed. The project was started in 2011 and, according
to the company, the site has the potential to become the
world’s largest underground potash mine.
"BHP Billiton will be sinking two shafts in Jansen, that
would be 60% complete. We would decide whether we would invest
further in the mine," a company spokesperson told IM. "We will
only invest if we can see good return."
BHP Billiton’s decision was primarily driven by
declining potash prices. Long-term supply contract prices have
fallen by at least 30% year-on-year (y-o-y). Potash producer
Belarusian Potash Co. (BPC) first announced at the end of June
that it would be supplying potash to Indian Potash Ltd (IPL) at
$227/tonne on a CFR India basis for 2016/17. The price was a
32% decline on 2015 contracts, which were signed at
|The Jansen mine shaft. BHP Billiton says there is no
"hard date" for
the project start up.
In July, Chinese buyers also finalised agreements with BPC
at $219/tonne CFR for the rest of 2016, compared with
$315/tonne last year. This was followed by ICL’s
announcement that it too had concluded a 700,000 tonne contract
China is the biggest potash buyer in the world and Chinese
potash agreements are an important indicator of global
fertiliser demand. Chinese contracts are traditionally signed
earlier in the year, but this year contracting was delayed
due to industry destocking during the first quarter.
BHP Billiton is also seeking a joint venture (JV) partner to
invest in the project, but the company declined to provide an
update on this.
Potash output at the Jansen mine will also be reduced when
production starts, but BHP Billiton said there is "no hard
date" for the project completion and start-up.
Amid global oversupply and weak fertiliser demand, producers
worldwide are either cutting output or delaying the start of
new production. German salt and potash producer K+S announced
in August that it will postpone production at its Legacy potash
mine in Saskatchewan to the second quarter in 2017, six months
later than its original planned date.
K+S restarts potash production in Germany
- Potash operations resumed
- Full capacity hard to reach
- Delays in deliveries to continue
German fertiliser and salt producer K+S AG restarted potash
production at its Unterbreizbach site in Germany on 22 August
following government approval for temporary waste water storage
at a nearby mine.
Thuringia State Authority granted permission to K+S to store
up to 200,000 cubic meters of waste water from the
Unterbreizbach site at the nearby Springen mine field on 18
August, according to the company release.
However, the two Werra plants at the Unterbreizbach site will
not become fully operational until K+S receives
government’s approval to dispose of a higher
volume of waste water in the deep well.
K+S would usually dispose its salt water waste into the
Werra river but it has been restricted due to low water levels
during the summer season. Meanwhile, K+S’s deep
well injection licence also limits the volume of waste water
disposal, which has caused production to halt.
K+S has applied to lift its waste water disposal quota via
injection wells but the licence is subjected to government
As potash production at the Unterbreizbach site has been
down for 50 days this year the mine is unlikely to reach its
600,000 tpa capacity, a K+S spokesperson told IM on 22 August.
Due to the on-going output disruptions at the site, K+S has
been meeting existing contractual orders partially from
inventories and also by raising production at other sites,
the spokesman said.
"For some customers, delays [in delivery] cannot be avoided,"
K+S company spokesman added.
Following its closure on 15 June, operations at its
neighbouring Hattorf site are still suspended with the
exception of Epsom salt production.
Output at the company’s Wintershall site, which
produces speciality fertiliser and is the only facility
producing pharmaceutical salt, also resumed on 22 August
following a maintenance shut down.
The unplanned outage at Unterbreizbach has cut potash,
sulphur and magnesium product output by 400,000 tonnes,
compared to the same period in 2015, and has also negatively
impacted the group’s performance, according to
the company’s second quarter financial results.