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VANCOUVER — BHP Billiton Ltd. is honing its strategy to sell Saskatchewan potash on its own to Asian customers, sidestepping Canada’s export marketing agency for the farming commodity.
The Australian mining giant, which this week announced a $2.6-billion (U.S.) investment in its Jansen mine southeast of Saskatoon, is crafting detailed plans to transport potash by rail. The company will use Canadian Pacific Railway Ltd. across Western Canada, then connect to Burlington Northern Santa Fe Corp.’s train system through Washington State, say BHP officials.
BHP is still working out the logistics of shipping potash from the Port of Vancouver in Washington, where a sprawling U.S. property has been set aside for a new export terminal that would be built in time for the company to launch sales in 2020.
The company’s plans highlight the new pressure being placed on Canpotex Ltd., Canada’s export agency for potash, one of two groups that together control roughly 70 per cent of global supplies of the fertilizer ingredient, used to boost crop yields on farms. Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc. are the agency’s members.
For decades, the cartel-like dominance of Canpotex and the Belarusian Potash Co. have allowed major producers to get better prices for their product than if individual companies competed for export customers. But that dominance is now in question. BPC appears to be splitting up, with the Russian partner walking away – a move that caused the stock prices of Canpotex’s three members to plummet. BHP’s plans for Jansen may shift the market dynamics further.
“It’s several years away before we start production, but we favour open and transparent markets,” BHP chief financial officer Graham Kerr said in an interview. He emphasized that BHP has no need or desire to join Canpotex.
Through Canpotex, the three major Canadian potash producers transport the mineral along the Western Canadian systems of both CP and Canadian National Railway Co. for export from the West Coast, primarily at the Port Metro Vancouver in British Columbia.
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