BHP's Jansen Project: A New Frontier in the Global Potash Market

The global potash market has experienced significant transformation over the past decade, fuelled by geopolitical shifts and rising demand for agricultural outputs. Potash has historically been controlled by a limited number of suppliers operating as cartels, and recent supply chain disruptions and sanctions have underscored the need for diversified sources.

BHP’s Jansen project in Saskatchewan, Canada, aims to be a new key player in this tough market. This multi-billion-dollar venture could reshape the global potash market, offering a new source of supply at a time of heightened global demand.

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A History of Control and Disruption

For decades, two cartels controlled the potash market: Canpotex, representing North American producers Nutrien, Mosaic, and Agrium, and the Belarusian Potash Company (BPC), a partnership between Uralkali and Belaruskali. Together, these entities controlled approximately 70% of the world’s potash supply, maintaining high prices through coordinated production limits.

In 2013, the market was thrown into disarray when Uralkali withdrew from its partnership with Belaruskali, causing the collapse of BPC and a 25% drop in potash prices. This breakup stemmed from tensions between the Russian and Belarusian producers, each accusing the other of pursuing deals outwith the partnership scope. While the disruption hurt Belaruskali, Russia and Belarus continued to be major suppliers, together accounting for a third of global potash production.

More recently, political instability and sanctions, particularly following Russia’s invasion of Ukraine and Belarus’s political repression, have disrupted the potash supply from these regions. These developments have made the Jansen project especially timely.

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BHP's Jansen Project

BHP’s Jansen project, located in Saskatchewan’s potash-rich basin, represents one of the largest potash developments in recent years. After more than a decade of delays, BHP has committed a total of $10.6 billion to the project, with production expected to begin in 2026, though potentially 9-12 months earlier. Once operational, Jansen is projected to produce 4.3 million tonnes of potash annually, aiming to double production to 8.5 million tonnes by the early 2030s.

By 2050, the global population is expected to reach 9.7 billion, requiring a 70% increase in food production. Potash, essential for improving water retention, crop yields, and disease resistance, will play a critical role in meeting this increased demand.

Jansen’s location offers BHP several logistical advantages. It’s situated within a day’s trucking distance from Minnesota and other major US agricultural hubs, and less than a day’s rail transport from key distribution networks. This proximity allows BHP to serve the North American market efficiently, reducing transport costs and lead times. With disruptions from Russia and Belarus persisting, Canadian potash, known for its stability, will become even more important in global supply.

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Navigating a Controlled Market

Despite Jansen’s promising potential, BHP will face challenges in a market still dominated by strong incumbents. Canpotex, the Canadian export cartel, controls close to 40% of the global potash supply. While the collapse of the Belaruskali-Uralkali cartel weakened the Russian-Belarusian bloc, these two countries remain significant global players (c.20% in recent years, down from over 30% in the early 2010s), especially in key markets like China, Brazil, and India, which together account for a large share of global potash consumption.

China typically imports over 5 million tonnes of potash per year, while Brazil, with its rapidly growing agricultural sector, close to double that figure. These two countries, along with India and the United States, represent nearly 80% of global potash consumption.

Jansen’s initial production of 4.3 million tonnes annually, while substantial, represents less than 7% of the projected 67.6 million tonnes of global potash production capacity by 2026. Even with potential expansions, BHP’s output will be smaller than that of Canpotex and the Russian-Belarusian producers, who have dominated the market for decades.

However, ongoing geopolitical risks in Eastern Europe, particularly sanctions on Belarus and Russia’s isolation following its invasion of Ukraine, offer both challenges and opportunities for BHP. While these disruptions have driven up potash prices - by as much as 200% in some markets in 2021 - they also provide an opening for BHP.

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BHP’s Strategic Focus and Competitive Edge

Targeting key markets like Brazil, Southeast Asia, and the US, BHP is positioning Jansen as a cost-competitive player. According to Karina Gistelinck, head of the Jansen project, production costs are forecast to be under $140 per metric tonne. This would make Jansen competitive with established Canadian producers like Nutrien and Mosaic, particularly as potash prices currently fluctuate between $300 and $450 per metric tonne.

Although potash prices have dropped 60% since their peak in 2022, largely due to the rebound of Belarusian and Russian supply, BHP remains confident in Jansen’s profitability. If the mine expands to full capacity, it could contribute 10% of the global supply by the 2030s.

BHP’s strategic focus on Brazil is particularly noteworthy. Brazil relies heavily on potash imports, and with its expanding agricultural sector, it is a key market for BHP’s output.

Growing fertiliser demand in Southeast Asia and the US further supports BHP’s diversification efforts, which are aimed at reducing dependency on China. Gistelinck anticipates a 2% annual increase in potash demand, driven by population growth and the need for more resilient agricultural systems in the face of climate change.

BHP has already secured non-binding agreements for Jansen’s production and expects to finalise these into binding contracts by 2025, cementing its place in the global fertiliser market.