BHP seeking $2 billion Jansen stake sale

BHP is considering selling a 25% stake in Jansen,  its Canadian potash project, according to a Reuters report quoting anonymous sources.

The Anglo-Australian mining giant is working with an investment bank for the potential sale and according to the report a deal "could be worth close to $2 billion."

If you bring in a partner, you can share the capital and risk and, depending on who the partner is, help secure an off-take (supply agreement) or offer expertise

BHP spokeswoman Bronwyn Wilkinson told Reuters "it was too early in the process for the company to have determined the size of a potential stake sale.":

“If you bring in a partner, you can share the capital and risk and, depending on who the partner is, help secure an off-take (supply agreement) or offer expertise,” Wilkinson said.

Activist investors Elliott Advisors have put pressure on BHP to quit the project in the province of Saskatchewan, stating that bringing Jansen into production would be “a severe strategic misstep”.

BHP has spent more than $2 billion on its first foray into potash and the mine could have a final bill north of $12 billion. At capacity Jansen could produce 8 million tonnes of potash a year or nearly 15% of global output of the crop nutrient, but BHP's phased approach would see commercial production around half that figure.

CEO Andrew Mackenzie said this week the project won’t come before the board before 2019 and that a number of options – including divesting – are on the table to proceed with Jansen.

BHP is spending $500m to finish Jansen’s two shafts by the end of 2019 and Mackenzie pointed out that once the shafts are completed by the end of 2019, Jansen would be “totally de-risked” and engineers would have “dealt with all the difficult parts”.

By that time according to Mackenzie: “We will only be three years away from first potash.” BHP also touted 2023 as a possible start-up date for Jansen earlier this year.


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