By Keith Norbury

Production from what could become North America’s largest potash mine, being developed by the Canadian subsidiary of Australia-based mining giant BHP Billiton, is still expected to leave the continent via a U.S. port. Exactly when production might begin, however, remains an open question.

BHP Billiton Canada Inc. spokesperson Bronwyn Wilkinson said in a recent email to Canadian Sailings that plans for Terminal 5 at Vancouver, Washington, are continuing and that work is progressing on the Jansen mine project in Sask­atchewan. Questions were raised in August about whether BHP Billiton might cancel or postpone both projects. That speculation was fuelled by news reports that the company was shelving $68 billion in new projects, in the wake of steep declines in prices of coal, iron ore and other commodities, resulting from weakness in European and Chinese demand. However, Ms. Wilkinson clarified that the company had not announced the postponement of new projects; however, it did not expect any new project approvals to be slated for execution in the 2014 financial year.

Ms. Wilkinson had earlier told CBC News that $1.2 billion has been committed to Jansen. While she did not confirm that figure to Canadian Sailings, she did say that about 400 people are now working at the Jansen site and that the company has decided to double the production capacity associated with the initial phase of development to four million tonnes annually.

Recent media reports also noted that Marius Kloppers, BHP Billiton’s CEO, said he is still excited about the Jansen project even though he declined to set a date for when the company’s Board would give final approval to the project. Ms. Wilkinson meanwhile declined to say whether or not the company still expects production at the mine to commence in 2015 as previously planned.

“Existing pre-commitment funding will enable us to further advance this project in the 2013 financial year as we work through the final engineering design and mining lease conversions that are required before we take the project to our Board,” Ms. Wilkinson said. She added that additional engineering planned for the mine will affect the timing of initial production. However, “until that work is complete,” the company cannot speculate on how that timing will be affected.

Mr. Kloppers’ remarks came after BHP Billiton released results for its most recent fiscal year, which ended June 30, which showed the company recorded a profit of US$15.42 billion on US$72.27 billion in revenues, which was 35 per cent less than the US$23.65 billion in profits on US$71.74 billion in revenues the previous fiscal year, according to media reports.

Meanwhile, Theresa Wagner, Communications Manager for the Port of Vancouver, Wash., said in late August that “all indications” are that BHP Billiton is going ahead with its plans for a potash terminal, a Columbian newspaper reported. And Ms. Wilkinson confirmed that BHP Billiton has “received the necessary environmental permits for inland and in-water construction work” at the port site. Preliminary construction work has also begun, she added.

Earlier this year, Chris Ryder, BHP Billiton Canada Inc.’s Vice-President of External Affairs, noted in an email to Canadian Sailings, “The port’s recent investments in utilities and rail infrastructure, the existing similar uses, and the consistency of our project with the Port’s strategic plan all led us to this site.”

Canadian Pacific Railway will supply rail infrastructure to the Jansen mine, as Saskatchewan Environment Minister Dustin Duncan noted in his “Reasons for Decision” of ministry approval for the mine under the province’s Environmental Assessment Act in June 2011.

“BHP Billiton is working with CP Rail and BNSF to move the product from Jansen to the West Coast,” Mr. Ryder confirmed. “CP Rail will upgrade its existing network and construct a new spur line that connects to the project site.” The mine site is about 140 kilometres east of Saskatoon, near the village of Jansen and the towns of LeRoy and Lanigan. (Jansen had 140 residents, according to the 2006 census, while LeRoy had a population of 412, and Lanigan’s population was 1,233.)

Half a century of eight million tonnes annually

The Jansen project is just the beginning of a series of potash projects BHP Billiton is working on Sask­atchewan. The company’s potash holdings total 14,500 square kilometres and have a combined estimated annual production potential of 16 million tonnes. Annual production of the Jansen mine at full capacity is estimated at eight million tonnes, Mr. Ryder said, which would make it the world’s largest potash mine. That is also the planned capacity of the potash terminal in Vancouver, Wash. However, it will take eight years to reach that level. Estimated life of the mine is “well over 50 years,” a company brochure says.

At maximum output, the Jansen project will employ more than 1,000, Mr. Ryder said. About 2,000 people will work on site during construction. BHP Billiton also employs about 140 people at its Saskatoon office, he added.

Production and service shafts have been excavated down to 45 metres, Ms. Wilkinson said. Excavation with specialized drilling rigs is ready to start. That will take the shafts to their full depth of one kilometre, she said.

“The two underground shafts are well advanced and their excavation is scheduled for completion before the end of the 2014 financial year,” Ms. Wilkinson said.

A freeze plant is now in operation, which will allow production and service shafts to be extended through the Blairmore aquifer to about 500 metres below the surface, Mr. Ryder noted earlier this year. The freezing prevents water from getting into the shafts during their construction. That process is expected to take three years. To date, BHP Billiton has committed $1.2 billion to the Jansen project, Mr. Ryder said. By way of comparison, it is estimated that reaching maximum planned production capacity may require a total investment of $12-15 billion.

Ms. Wilkinson said the freeze program “is progressing well” with work continuing on hoist houses and shaft-sinking headframes. Those are being erected “to support the shaft sinking work,” she noted.

“BHP Billiton has received all the necessary permits that are required for the current level of development, and is continuing to move the project towards a production decision,” Bob Ellis, Director of Public Affairs with Saskatchewan’s Ministry of the Economy, said in a September email message. Mr. Ellis also reaffirmed what he had said earlier about the company needing to obtain other specialized permits and licences before commencing production. “It’s not at that stage yet,” he added. BHP Billiton has various “mineral dispositions” that allow the company to do exploration work in the Jansen area, Mr. Ellis noted previously.

“If BHP Billiton decides to proceed with a mine, it would then apply to have those mineral dispositions converted to mineral leases,” Mr. Ellis said. “There would also be other specialized permits and licences that it would have to acquire as the project moved into production – those would come from various government agencies, such as our Ministry of Environment, the Ministry of Highways and Infrastructure, SaskPower, and the Ministry of Labour Relations and Workplace Safety, among others.”

Mr. Ryder said in February that the company has completed the pre-feasibility stage of an engineering study and is now in the feasibility stage. “During the feasibility stage, engineering will be advanced to support execution pending final Board sanction,” Mr. Ryder said.

Columbia River port preferred

The search for a port began in May 2008, Mr. Ryder said. Among the criteria were “good rail access, good ship access, sufficient land, and low environmental impacts,” he said.

His company does not give estimates on capital projects until they are approved, he said, noting that the port project is also only in the feasibility stage. The Columbian newspaper, however, reported in August 2011 that the port project would cost several hundred million dollars and break ground in 2012.

BHP Billiton chose Vancouver, Washington, over 30 other ports in the U.S. and Canada, including Prince Rupert, which Mr. Ryder said was not ready to meet his company’s production needs, the paper reported. Vancouver, Washington, is on the North bank of the Columbia River opposite Portland, Oregon. The Columbia River channel has been deepened to accommodate ships carrying larger loads, the newspaper noted. BHP Billiton and the Port have reached a preliminary agreement and were finalizing the terms and a lease agreement, the Port’s website reported in August 2011.

“Designing and developing an efficient, world-class port and logistics system is an important part of achieving our goal of building a successful low-cost potash business,” the news release quoted Mark Young, BHP Billiton port and logistics manager. “The Port of Vancouver’s Terminal 5 location is an attractive site, which would be capable of handling the anticipated production from the Jansen development.”

Potash Corp. takeover bid withdrawn

Last summer, BHP Billiton was still planning a $39 billion takeover of Potash Corp. However, after Saskatchewan Premier Brad Wall said the deal would not provide a “net benefit” to Canada, the federal government said it would quash it. Industry Minister Tony Clement gave BHP Billiton 30 days to come up with a new proposal, but the company decided instead to withdraw its bid entirely.

Nevertheless, BHP Billiton CEO Marius Kloppers said the company remained committed to the Jansen project and had already sunk $400 million into it, CBC reported at the time.

Mr. Ryder also noted, “The plans to develop Jansen, and the work with the Port of Vancouver, were well under way” before the offer to buy Potash Corp. was made “and were not connected” to the offer.

BHP Billiton also consolidated management of its Canadian headquarters in Saskatoon, a move the Saskatchewan government greeted with enthusiasm when it was announced in May 2011. The relocation from Vancouver of the company’s diamond and specialty products division added about 30 positions to the 69 employees already in Saskatoon, said a government news release.

“BHP Billiton has indicated its strong commitment to Saskatchewan and the major potash projects it is developing here,” Energy and Resources Minister Bill Boyd said in that news release. “This relocation announcement underscores that commitment and the company’s desire to establish deep roots in our province.”

In September, Mr. Ellis reaffirmed the government’s position by saying, “As a government, we are encouraged that BHP Billiton is continuing its exploration and evaluation work on its Jansen project and we are optimistic that the company will reach a ­positive production decision.”

Diamonds aren’t necessarily forever

Meanwhile, though, BHP Billiton showed signs that it is looking to get out of the diamond mining business in Canada. The company sold its stake in the Chidliak diamond project on Baffin Island to Peregrine Diamonds Ltd., the Canadian Press reported in December 2011.

BHP Billiton also said it was reviewing its 80-per-cent ownership of the Ekati mine in the Northwest Territories. Should no buyer come forward that meets BHP’s criteria, it will keep operating the mine in a “sustainable manner,” the news report said. The Ekati operation, which employs 1,400 people, is BHP Billiton’s only operating diamond mine.

“The review of the diamond business is ongoing and we have nothing new to announce at this stage,” Ms. Wilkinson said.

In comparison, BHP Billiton has extensive Canadian holdings in potash. The company is systematically exploring those 14,500 square kilometres using two-dimensional seismic surveys, which look at slices of the earth. Three-dimensional surveys, which examine volumes of earth in more detail, have also started and even been completed in the Boulder and Melville areas. The seismic studies “have shown positive results,” Mr. Ryder said earlier this year.

After Jansen, the company’s next priorities are sites near the Saskatchewan communities of Young, Melville, and Boulder. A concept study has been completed on Young, “which shows that the resource could support a large scale potash project and we are progressing work to identify the optimal shaft location,” Mr. Ryder said.

Ms. Wilkinson said work on those projects is continuing. For example, the company has completed a concept study on the Young site and expects to move soon to a feasibility study.

“We are continuing to explore the basin and we see Jansen as the first project in what will eventually become a large business for BHP Billiton based in Saskatchewan,” Ms. Wilkinson said.

BHP to market potash on its own

According to a presentation made in January in Whistler, B.C., the company intends “to market its own potash production.” That appears to answer “no” to the question of whether or not BHP Billiton would join Canpotex, a consortium co-owned by three other major potash producers —Potash Corporation of Saskatchewan Inc., Agrium Inc., and The Mosaic Company. Canpotex handles the sale and delivery of potash produced by its co-owners to overseas export markets.

Canpotex signed a 10-year agreement in January 2012 with Canadian Pacific to transport potash to the Pacific Coast, the railway said in a news release. Under the deal, Canadian Pacific would bring a large majority of Canpotex’s potash to its Neptune Terminals in North Vancouver. And, in conjunction with Union Pacific Railway, CP would carry all Canpotex potash shipments destined for Portland, Oregon.

Canadian Pacific had announced in December 2011 the completion of the first phase of its $250 million North Main Line infrastructure program. That included about 250 kilometres of track enhancements to the line. The North Main Line runs between Winnipeg and Edmonton parallel to Highway 16 and passes within 10 kilometres of the Jansen mine project. “The North Main Line infrastructure enhancement program includes rail and tie upgrades; new and extended sidings, which will allow for increased number of long trains; and public crossing upgrades,” the December news release said. The improvements will benefit the potash industry by reducing transit times, decreasing wear and tear on rail cars, and increasing traffic capacity and reliability, CP’s media relations manager, Kevin Hyrsak, said in an email message earlier this year.

BHP Billiton – which is based in Melbourne, Australia, and London, England – is “a diversified natural resources company,” according to, which in April ranked it 16th among the world’s companies in market value, and eighth in profits. BHP Billiton had a market capitalization of US$187.53 billion in April and employed 40,757 people, Forbes reported.