Potash mentions in BHP’s Annual Report – November 2014 #potash

Potash mentions from BHP Billiton’s Annual Report 2014
Page 11 of 348
In August 2014, we announced a proposal to create an independent global metals and mining company based on a selection of BHP Billiton’s high-quality aluminium, coal, manganese, nickel
and silver assets. Separating these assets via a demerger has the potential to unlock shareholder value by significantly simplifying
the BHP Billiton Group and creating two portfolios of complementary assets. Once simplified, BHP Billiton would be almost exclusively focused on our large, long-life iron ore, copper, coal, petroleum
and potash basins. With fewer assets and a greater upstream
focus, BHP Billiton would be able to reduce costs and improve the productivity of our largest businesses more quickly. The proposed demerger remains subject to the receipt of satisfactory third party approvals, final Board approval and shareholder vote.
____________________________________
Page 15 of 348
We believe that our uniquely diversified portfolio is robust, both
across these scenarios, and also shorter-term shock events.
As an example, in a severely carbon constrained world, we believe
there is significant upside for our potash and uranium commodities,
and also for our high-quality hard coking coal (lower smelting
emissions) and iron ore lump product (direct blast furnace feed),
while copper is resilient. In aggregate these mitigate potential
negative impacts in other commodities, given the relatively short
pay-back periods for most present and future investments in fossil
fuel production. Conversely, our portfolio allows us to capture
upsides in an environment where developing countries experience
strong global growth.
_________________________________
Page 20 of 348
BHP Billiton’s continued diversification
If the demerger is approved, we would focus almost exclusively
on our large, long-life iron ore, copper, coal, petroleum and potash
basins. By concentrating on the development and operation
of these basins, BHP Billiton expects to reduce costs and improve
productivity more quickly.
Following the demerger, BHP Billiton would have a simpler portfolio
with fewer assets and a greater focus on upstream operations.
BHP Billiton would remain:
• the largest exporter of metallurgical coal;
• a global top three producer of iron ore;
• a global top four exporter of copper concentrate;
• the largest overseas investor in onshore US shale;
• the developer of the world’s best undeveloped potash resource
in Saskatchewan, Canada.
Consistent with our established strategy, our Core Portfolio (1)
provides broad exposure to steelmaking raw materials, copper,
energy and potentially agricultural markets and will remain
diversified by commodity, geography and market.
___________________________________
Page 38 of 348
Description of the Potash Business
Jansen Potash Project
Our Potash strategy is to build a material industry position over
the long term.
We hold exploration permits and mining leases, issued by the
Government of Saskatchewan, covering more than 14,000 square
kilometres of mineral rights in the province of Saskatchewan in
Canada. We have progressively explored our permit areas over
the past seven years and continue to evaluate their economic
development potential. We are converting our exploration permits
to long-term leases as these permits mature in order to enable
further evaluation. To date, we have secured 4,400 square kilometres
under long-term mining leases.
We believe our Jansen Potash Project, a greenfield potash project
in south-central Saskatchewan, is the world’s best undeveloped
potash resource and is likely to be a low-cost source of supply
once fully developed. Investment in Jansen could underpin
a potential fifth pillar of BHP Billiton, given the opportunity
to develop a multi-decade, multi-mine basin in Saskatchewan.
On 20 August 2013, we announced an additional US$2.6 billion
investment for Jansen, bringing total approved spending to
US$3.8 billion. This investment is funding the excavation and
lining of the Project’s production and service shafts, and the
installation of surface infrastructure and utilities. The level
of expenditure on the Jansen Potash Project in FY2014
was US$596 million.
With our investment premised on the attractive longer-term market
fundamentals for potash, we will continue to modulate the pace
of development as we seek to time our entrance to meet market
demand. The introduction of one or more minority partners,
consistent with our approach for certain of our other resource
operations, will be considered at the appropriate time.
On the basis of our current projections and assuming Board
approval, the Jansen mine is likely to ramp-up to its nameplate
capacity of approximately 10 Mtpa of agricultural grade potassium
chloride in the decade beyond 2020.
____________________________________
Page 39 of 348
Potash recorded an Underlying EBIT loss of US$583 million.
This included: a US$68 million impairment associated with
our decision to allow the exclusivity agreement for Terminal 5
at the Port of Vancouver (US) to lapse; and a US$300 million
charge related to the revision of mine site rehabilitation provisions for the Group’s North American closed mines, which are managed
by our Potash Business. In addition, exploration expense for Potash was US$47 million, a US$42 million reduction from FY2013.
The Jansen Potash Project was 30 per cent complete at the
end of the period with significant progress made on surface infrastructure and shaft excavation continuing.
___________________________________________
From page of 80 of 348
2.1.1 Petroleum and Potash Business continued
Potash
Our Potash strategy is to build a material industry position over
the long term.
We hold exploration permits and mining leases, issued by the
Government of Saskatchewan, covering more than 14,000 square
kilometres of mineral rights in the province of Saskatchewan
in Canada. We have progressively explored our permit areas over
the past seven years and continue to evaluate their economic
development potential. We are converting our exploration permits
to long-term lease as these permits mature in order to enable
further evaluation. To date, we have secured 4,400 square
kilometres under long-term mining leases.
We continue to progress our Jansen Potash Project, a greenfield
potash project, located approximately 140 kilometres east of
Saskatoon in south-central Saskatchewan. We believe Jansen
is the world’s best undeveloped potash resource and is likely to
be a low-cost source of supply once fully developed. Investment
in Jansen could underpin a potential fifth pillar of BHP Billiton,
given the opportunity to develop a multi-decade, multi-mine
basin in Saskatchewan.
On 20 August 2013, we announced an additional US$2.6 billion
investment for Jansen, bringing total approved spending to
US$3.8 billion. This investment is funding the excavation and lining
of the Project’s production and service shafts, and the installation
of essential surface infrastructure and utilities.
The level of expenditure on the Jansen Potash Project in FY2014
was US$596 million, which was lower than the annual instalment
of US$800 million previously announced for FY2014. We suspended
excavation of the production and service shafts in the December
2013 quarter to enable a thorough review of activities completed
and to ensure all learnings were captured and adopted in future
works. Shaft excavation resumed in the March 2014 quarter and
progressed in a staggered manner to mitigate risk and optimise
their development. As at 30 June 2014, the pre-development phase
was 30 per cent complete.
During FY2014, we allowed our exclusivity for Terminal 5 at the
Port of Vancouver to lapse. We are currently assessing a range
of options to meet our port requirements.
With our investment premised on the attractive longer-term market
fundamentals for potash, we will continue to modulate the pace
of development as we seek to time our entrance to meet market
demand. The introduction of one or more minority partners,
consistent with our approach for certain of our other resource
operations, will be considered at the appropriate time.
On the basis of our current projections and assuming Board approval,
the Jansen Potash Project is likely to ramp-up to its nameplate
capacity of approximately 10 Mtpa of agricultural grade potassium
chloride (KCl) in the decade beyond 2020. The Measured Resource
estimate for Jansen is 5.3 billion tonnes at 25.6 per cent potassium
oxide (K2O) (25.6 per cent K2O is equivalent to 40.5 per cent KCl
using the mineralogical conversion factor of 1.583) with an
anticipated life of more than 50 years. The Government of
Saskatchewan has issued a Potash Lease Special Agreement (KLSA)
for our Jansen Project, which provides long-term security of tenure
to allow the ongoing development and subsequent operation of
Jansen for the life of the operation.
We are continuing to evaluate other areas for which we have
exploration permits in the Saskatchewan potash basin, including
Young, Boulder and Melville, through analysis of the extensive
data collected from successive exploration programs.
In 2013, the management of the closed mine sites associated
with Base Metals North America was transitioned from the
Copper to the Potash Business. All locations are in care and
maintenance or in various stages of closure.
___________________________________________
Page 134 of 348
BHP Jansen mineral resources - Nov 2014 ar

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on November 20, 2014, in potash. Bookmark the permalink. Leave a comment.

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