News Manure
Criticism of new potash mine due to oversupply on the market
Australian-British mining company BHP Group is under pressure from investors to halt a major potash mining project in Canada. Critical investors point to the current oversupply in the potash market. The Canadian government, on the other hand, would like to see the project go ahead.
Critical lenders believe that BHP Group can better invest the money in other projects with a more attractive prospect of return. The potash market is currently a challenging market according to various parties. Large fertilizer companies such as K+S, Nutrien and Mosaic are not operating at full capacity due to the current low potash prices.
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Investors expect an oversupply of potash on the world market for a large part of the coming decade. According to them, this is at the expense of the return on the potassium mine. Instead, they would rather see BHP invest in other products such as copper or nickel, where the market has received a huge boost partly due to electrification.
The first phase of developing the potash mine in Saskatchewan, Canada is estimated at $5,7 billion and is scheduled to take 5 years. The annual production of the mine will be around 4,4 million tons of potash, with an estimated lifespan of 100 years.
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BHP has already invested $4,5 billion in the project, which will deliver the group's first potash mine. BHP entered the potash market under previous CEO Andrew Mackenzie as part of its strategy of diversifying its portfolio. The world's largest mining company expects demand for potash to double by 2050.
Jurphaas Lugtenburg
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