BHP Group Ltd. has gone from lukewarm to hot on its Jansen potash mine in Saskatchewan, announcing Tuesday that it is working to accelerate first production by a year to 2026, and that it intends to speed up future expansions as potash prices continue to soar.

The Australian mining giant also reported in its year-end operational review that work on Jansen’s shaft, which already runs one-kilometre deep, was completed in June at a total cost of US$2.97 billion.

BHP says Jansen would initially produce 4.35 million tonnes of potash per year and has the potential to ramp up to around 12 million tonnes per year, making it one of the largest potash mines in the world. Officially, the mine has been under development for years, but BHP only committed to completing it in 2021, when CEO Mike Henry recalibrated the company’s portfolio towards “future-facing” commodities such as potash, a fertilizer that could be used to feed a growing world population, and battery metals for electrification.

“I’ve been clear that BHP needs to increase its exposure to future-facing commodities and that includes things like copper, nickel and potash,” Henry said in an interview with the Financial Post in 2020.

At that point, the company had already invested US$4 billion in the project, but Henry insisted that BHP was prepared to walk away based on potash prices.

Last August, BHP committed to fund all of the US$5.7 billion first phase. Although it has built a 97-metre tall headframe, BHP described the project in the operational review as only eight per cent completed, but confirmed that it is working to accelerate the timeframe for first production to 2026.

Earlier this year, BHP sold its petroleum business for $2.8 billion, and the company has said it will put its capital into potash instead.

“Today, in effect, we’re replacing our petroleum business with potash,” chief financial officer David Lamott said in May at the BMO Farm to Market Conference.

The Jansen mine has four stages, each capable of producing around 4 million tonnes of potash per year. Lamott said even if potash prices fell 50 per cent, “we’d be generating around US$4 to US$5 billion of EBITDA per year. For comparison, our petroleum business averaged around US$3 billion per annum over the past five years.”

Still, petroleum accounted for five per cent of the company’s annual earnings.

While oil prices have spiked in recent months, as part of the fallout from Russia’s invasion of Ukraine, so have potash prices. Western sanctions against Russia and Belarus, which account for 37.6 per cent of world potash production, pre-date the latest conflict and had already disrupted the global fertilizer market; the latest conflict exacerbated the situation.

In June, Saskatoon-based Nutrien Ltd., the world’s largest potash producer, said it would ramp up its annual production to 18 million tonnes by 2025, a 40-per-cent increase, as interim chief executive Ken Seitz warned that a global food crisis would soon affect tens of millions of people in the poorest countries.

“Our view is actually that the physical impact of this shortage in crop nutrients is going to start to be felt over the coming few months here,” Seitz said.

In June, the federal government committed to spending $100 million so that BHP could invest in technologies to reduce greenhouse gas emissions at Jansen.

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Lamott has said Jansen, located 140 miles east of Saskatoon, could operate for a century.

“It has the pathway to become our next Western Australia Iron Ore or Escondida over the next few decades,” he said at the BMO Farm to Market Conference, referencing the company’s iron ore and copper mines, which underpin its current portfolio.

In addition to announcing that it is looking to begin production at Jansen in 2026 rather than 2027, BHP also said it wants to accelerate phase two of Jansen, which would add another 4 million tonnes of annual potash production. But it did not give a target date for that phase, which remains many years away.

In Canada, the company also noted that it had formed an alliance Midland Exploration Inc. and in April funded a nickel exploration program in Nunavik, Que.

• Email: gfriedman@postmedia.com | Twitter: GabeFriedz