BHP approves US$240 million capital expenditure for Jansen

BHP Billiton Diamonds, a member of the BHP Billiton (BHP-N) group of companies, has given the green light to spend US$240 million on developing the first stages of the Jansen potash project, an underground potash development in central Saskatchewan, 140 km east of Saskatoon.

The pre-approval expenditure will help lay the groundwork for the start of production and the sinking of service shafts. Part of the money will be used to freeze the ground to allow shafts to be sunk safely once the company receives its environmental permits, which it expects will be some time in the middle of next year.

The Jansen project is in the final stages of a pre-feasibility study and is expected to move to the feasibility phase in mid-2010, with a full investment decision and construction slated to start by mid- to late 2011.

Jansen will produce about 8 million tonnes a year of agricultural grade potash, which could account for about 16% of the global market, the company says.

In a report submitted to Saskatchewan’s Ministry of the Environment in November 2008, BHP noted that surface facilities will be developed in a project area of 780 sq km.

Based on historical data and continuing exploration, the expected mine life is at least 50 years and the company believes the ore body is amenable to standard underground potash mining practices.

Environmental baseline research was initiated in June 2008 and will continue this year. The research covers meteorology, air quality, noise, soils, terrain, vegetation, ecosystem mapping, surface hydrology, hydrogeology, wetlands, water and sediment quality, aquatics biology, fish and fish habitat, wildlife, socio-economics, land use, traditional knowledge, archaeology and build heritage.

The potash in southern Saskatchewan is hosted in the Prairie Evaporite formation, which forms part of the Elk Point Basin. The potash deposits are all sedimentary with the potash minerals representing the final stages of evaporation of a shallow inland sea.

Imperial Oil first discovered potash near Radville in southeastern Saskatchewan in 1942.