B.C. port deal triggers BHP’s $7.5 billion potash mine

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Westshore Terminals [WTE-TSX] its Westshore Terminals LP unit recently entered into a conditional agreement to provide services that triggered BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK] final investment decision to proceed with the $7.5 billion Jansen Stage 1 potash project in Saskatchewan.

The conditions precedent in the agreement have now been satisfied, Westshore said in a press release, Tuesday.

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

The Jansen S1 project is expected to produce approximately 4.35 million tonnes of potash annually and has a basin position with the potential for further expansion. First ore is targeted for the 2027 calendar year, with construction expected to take approximately six years, followed by a ramp up period of two years.

Jansen S1 includes the design, engineering and construction of an underground potash mine and surface infrastructure, including a processing facility, a product storage building and continuous automated rail loading system.

Product will be shipped through Westshore in Delta, B.C. and the project includes funding for the required port infrastructure to support the Jansen operation for a term to 2051, subject to extension.

Westshore Terminals is Canada’s premier coal export terminal and handles over 33 million tonnes of coal annually. The Westshore Terminals Ltd. partnership is owned by Westshore Terminals Investment Corp. On Tuesday, the shares rose 1.8% or $0.38 to $21.37 on volume of 128,360 and trade in a 52-week range of $13.12 and $24.82.

Westshore is designing and will construct the necessary infrastructure to handle potash, including a potash dumper, storage building and associated conveying system. In addition, certain existing infrastructure at Westshore terminal will be modified to support handling potash.

Potash will be loaded only at the terminal’s Berth 2, which will continue to be available for loading coal. Coal operations are expected to continue without undue disruption through the construction phase.

Westshore said BHP will substantially fund the construction, with Westshore being responsible for construction costs in excess of the agreed budget. Westshore will also contribute up to an aggregate $33 million to costs related to specific infrastructure or unexpected permitting conditions that are encountered. The agreement provides that potash infrastructure must be available by mid 2026.

BHP has already invested US$4.5 billion in the Jansen project, including US$2.97 billion for the construction of two shafts and associated infrastructure that is now 93% complete. To date, approximately 50% of all engineering required for Jansen stage one has been completed, significantly de-risking the project.


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