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BHP ticks off massive investment in Jansen potash project

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BHP has approved $US5.7 billion ($7.8 billion) in funding for the Jansen stage one potash project in Canada.

The approval of the capital expenditure will support the design, engineering and construction of an underground potash mine, a processing facility, product storage building, and an automated rail loading system.

BHP is expecting demand for potash to ramp up by the late 2020s or early 2030s.

“This is an important milestone for BHP and an investment in a new commodity that we believe will create value for shareholders for generations,” BHP chief executive officer Mike Henry said.

“Jansen is located in the world’s best potash basin and is expected to operate for up to 100 years.

“Potash provides BHP with increased leverage to key global mega-trends, including rising population, changing diets, decarbonisation and improving environmental stewardship.”

BHP is expecting to produce around 4.35 million tonnes of potash per year at the Jansen stage one project.

First ore is slated for 2027 with construction expected to take six years followed by a two-year ramp up.

“In addition to its merits as a stand-alone project, Jansen also brings with it a series of high returning growth options in an attractive investment jurisdiction,” Henry said.

“In developing the Jansen project, BHP has had ongoing positive engagement and collaboration with First Nations and local communities, and with the provincial and federal governments.

“Jansen is designed with a focus on sustainability, including being designed for low (greenhouse gas) emissions and low water consumption.”

Jansen is expected to provide a 12 to 14 per cent rate of return with an expected payback of seven years from first production.

Meanwhile, BHP achieved $US37.4 billion in earnings in the 2020-21 financial year, which was up b y69 per cent from the previous year.

The positive outcome has led the company to deliver a record final dividend of $US2/share.

BHP has now given shareholders more than $US15 billion in returns for the full year.

The company produced 254 million tonnes of iron ore in the 2020-211 financial year, compared to 248 million tonnes in the previous period.

This was driven by record production at the Western Australia Iron Ore Operations (WAIO), which produced 252 million tonnes (284 million tonnes on a 100 per cent basis).

“BHP is in a strong position to manage its future in a time of rapid change. We have a clear strategy and are executing against it,” BHP chair Ken MacKenzie said.

“Jansen stage one will give BHP exposure to a commodity with a strong demand outlook and decades of potential growth.”

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