BHP’s Thomas leads world’s largest potash project with targets on emissions, hiring

Simon Thomas, head of BHP’s (NYSE: BHP; LSE: BHP; ASX: BHP) Jansen potash project in Saskatchewan with a stage-one cost of US$5.7 billion, has returned to agriculture after top positions in the company’s Western Australia iron ore unit for two decades. He grew up on a farm north of Melbourne.

“This role is probably one of the better roles in the organization, it’s highly exciting with a fantastic outlook,” Thomas said on a call this month from Saskatoon, where he’s been based for three years.

“We are developing something that is a new commodity for the company, a future-facing commodity and there’s a lot of things that we’re doing to look forward, which is always a good place to be.”

BHP, the world’s largest miner by market value, is exploring for copper in Labrador, the Arctic and British Columbia, but Jansen is currently the company’s sole mining project in Canada. It’s accelerating the project to start in late 2026, nine months earlier than planned, as the fertilizer market loses supplies from top global producers Russia and Belarus, as well as Ukraine. When Jansen’s four phases are complete, it would be able to produce 17 million tonnes a year as the world’s largest underground potash mine.

Melbourne-based BHP is pushing ahead on a few fronts with the project 140 km east of Saskatoon, such as electrification to cut emissions and costs, and strong representation of women and First Nations among its workforce.

Emissions target

About 80% of underground mining vehicles are to be electric initially, ramping up eventually to the entire sub-surface fleet, Thomas said. It’s part of a company-wide plan to reduce green-house gas output by at least 30% of 2020 levels by 2030 and achieve net zero emissions by 2050.  Jansen is also considering carbon neutral electricity to supply the operation through commercial and government partnerships.

“With complete electrification of our underground equipment, that work environment will be very different from an air quality perspective,” Thomas said. “And then that also improves the efficiency of things like our ventilation and our side air supply and things like that.”

While the project does have a target on CO₂ emissions, it is based on third-party data, which BHP said it couldn’t disclose.

Even so, the project has had a long gestation over nearly two decades, and may have received less attention during BHP’s failed takeover in 2010 of Nutrien (TSX: NTR; NYSE: NTR), the world’s largest potash producer. Potash prices have fallen to about US$350 per tonne last month from more than US$800 a tonne in October.

The market conditions prompted Nutrien in July to indefinitely postpone its plans to expand annual production to 18 million tonnes. It produced 13 million tonnes last year. BHP must also contend with the challenges of operating in Canada’s north, such as long winters although the site is well connected to infrastructure.

BHP crews have sunk two shafts and are proceeding with the potash mill by early next year. Credit: BHP

The company has worked with equipment providers to improve productivity and automation via artificial intelligence in areas such as sensors and ground stabilization on machines boring into the ore, extracting and conveying it to storage, Thomas said. Jansen also plans to use ground-penetrating radar to guide the machines through the ore body.

With studies on the site going back to at least 2008, BHP has had time to fine-tune its design with consultant Hatch into what it calls mature engineering. It’s been key in weathering post-COVID-19 inflation, says Thomas, a civil and structural engineer.

“If you’re very well progressing your engineering, your execution teams are given the best opportunity to deliver and that’s something we’re seeing here,” he said. “It gives you optionality.”

More than half women

Jansen is pushing up the ranks among progressive employers in the province, with women as 57% of the project’s staff including administration and communications (though not construction contractors), compared with 47.4% of the country-wide workforce last year, according to the World Bank.

The project is targeting more than 20% of its workforce from Indigenous communities. It has awarded $260 million in contracts to local Indigenous suppliers this year, amassing a total of $470 million since the company approved stage one of the project two years ago.

The project plans to employ about 3,500 workers to help build the site before its planned start in 2026. In Saskatchewan, health care employs by far the most workers at about 59,000 people while utility SaskTel has 3,100 employees in second, according to Immigroup, an immigration consultant.

BHP is partnering with trainers and schools such as Carleton Trail College and Women Building Futures for pre-apprenticeship programs that are focused on women and First Nations people. These are meant to expose people to the industry who may not have considered mining and to help build transferrable skill sets when they’re not from the industry, Thomas said.

Crews sank two shafts before stage one construction began this year. Building should transition to above ground with the ore mill in the new year plus storage buildings and offices, Thomas said. Meantime, workers underground are digging out laterally from the shafts for future mining areas, zones for conveyor systems, storage and maintenance bays, he said.

The project’s first stage aims to produce 4.4 million tonnes a year of the fertilizer ingredient. Global annual potash consumption was about 45 million tonnes in 2021, according to the U.S. Geological Survey. Worldwide production was 72 million tonnes that year, according to the government of Canada.

BHP is forecasting 2.5%-3% annual compound growth in global potash demand because of population increases, intensifying agriculture and crop productivity demands as well as changing diets.

Shares in BHP traded at US$56.14 ($76.10) apiece on Wednesday afternoon in New York, valuing the company at US$142.9 billion. Its shares traded in a 52-week range of US$46.92 and US$71.52.

The company’s future in Canada is tied to agriculture as was Thomas’s past. His siblings took over the family farms Down Under that still produce rice, wheat, oats, barley, soybeans, lamb and beef. He says Canada is similar to Australia among its people, the British connection and even the weather in its own way.

“There’s a lot of alignment in the way we live, the type of environment that we live in, whether it be harsh heat in Australia versus harsh cold in Canada,” he said. “But we’re both probably exploratory type cultures, you know, we get the most of the environment we’re in.”