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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (34756)	3/26/2009 10:19:39 PM
From: LoneClone	Read Replies (1) \| Respond to of 194034

BHP plans a potash mine in Canada (Reuters) Updated: 2009-03-23 14:51 chinamining.org BHP Billiton plans a potash mine in Canada that would be the world's largest, but the ever-hungry market seems set to cope with the extra supply without a price-depressing glut. The proposed Jansen mine in the western province of Saskatchewan would start producing potash in January 2015, the company said in a November proposal to the Saskatchewan government. It would reach full production of eight million tonnes a year in February 2026 and would be the world's first new potash mine in more than 20 years. Potash is a key component of fertilizer, and demand has been booming. The plan from the Australia-based mining company comes as other big players look to add another 17.1 million tonnes a year by 2020 to current annual global potash production of 55 million tonnes. Potash Corp of Saskatchewan is expanding its mines in Saskatchewan and New Brunswick to add 9 million tonnes by 2014, while Mosaic targets 5.1 million tonnes of new production by 2020. Agrium is considering a new mine that, combined with expansion of its existing Saskatchewan mine, would add 3 million tonnes by about 2018. But Keith Carpenter, agriculture analyst with Canaccord Adams in Toronto, said the higher production is far enough away that the market will cope, especially as fertilizer demand rises in response to higher meat consumption in developing countries. "Once we get out of this funk we're in on a global scale, you're going to see a return to significant potash growth," Mr. Carpenter said. "Once people attain that better diet, they don't go back to a poorer diet unless they're forced to go back there."Lisa Smith, senior potash analyst with Fertecon, said she does not expect a global over-supply of potash. While some producers are expanding, other mines may run out, or close due to flooding and some junior companies may not proceed with projects, she said. "We feel there is a place for some, not all, of the projects currently under consideration," she said in an email. BMO Capital Markets said in February that companies have announced plans to add 32 million tonnes a year to total world potash output by 2017. If all those plans go ahead, producers will need annual global demand growth of at least 4%, higher than the historic growth of 2.5% to 3%, said BMO analyst Joel Jackson. Some projects likely won't go ahead because of high costs and risk, he said. "There's no guarantee of a tight market when your supply comes on."BHP Billiton expects a decision by the Saskatchewan environment minister by spring 2011, so construction could start that summer. The government will consider environmental issues, including the mine's impact on air and water quality, wildlife and whether the rural area can support 950 more workers, said Brent Bitter, project manager for the government's environment assessment branch. Companies have in the past received environmental approval, then waited for market conditions to improve before beginning construction, he said. A BHP Billiton spokesman declined a request for an interview, saying the project is still in early stages and is undergoing a pre-feasibility study. The company has not estimated the cost of building the mine. But industry experts say new potash mines cost about $2.5-billion for every 2.2 million tonnes of annual production. The company had drilled 19 test holes for the new mine as of the end of January with more planned later this year, according to the company's potash newsletter. The mine would be located on a 780-square-kilometre parcel of land 140 km (90 miles) west of Saskatoon, the largest city in the mostly agricultural province. Canada is the world's top producer of potash and it mined more than one-quarter of global production in 2006. The majority of Canada's potash by far is mined in Saskatchewan. China, the U.S. and Brazil are the world's top three potash markets, accounting for almost half of global demand in 2006, according to the company's proposal. BHP Billiton has not said how it will market its potash. Canpotex, owned by Potash Corp, Mosaic and Agrium, currently markets all Saskatchewan potash exports.