BHP has recently finalized non-binding sales agreements for the entire potash production from its Canadian mine’s two phases, with plans to solidify these deals into firm offtake agreements within the next 12-18 months, as revealed by a senior executive to Reuters.
Chief Commercial Officer Ragnar Udd confirmed BHP’s disinterest in acquiring the dormant Cobre Panama copper mine from First Quantum Minerals, emphasizing the company’s focus on its potash endeavors.
The Australian-based mining giant’s foray into potash sales is anticipated to disrupt the global fertilizer market, traditionally dominated by producers in Canada, Belarus, and Russia. Potash is a crucial agricultural input for enhancing crop yields, particularly for staples like corn.
BHP anticipates commencing production at Jansen, Saskatchewan, by late 2026, with an initial output target of 4.35 million metric tons annually. The approved second phase is set to elevate annual production to 8.5 million tons, significantly expanding global potash supply by approximately 10%.
In a strategic move, BHP intends to distribute potash to intermediaries rather than directly to end-users, a departure from its usual operational model that emphasizes vertical integration. This approach allows BHP to concentrate on its core strength of production while leveraging existing distribution networks.
The shift towards distributor sales aligns with customer feedback praising BHP’s entry as a reliable and stable supply source in the potash market.
BHP aims to convert the tentative sales agreements into binding contracts as production nears commencement, with the first anticipated contracts likely to materialize by late 2025 or early 2026.