Unafraid of potassium fertilizer prices plummeting by more than 60%, BHP Group Ltd Sponsored American Depositary Receipt representing 2 shares (BHP.US) is betting that the Canadian project will be profitable.

BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US) potassium fertilizer business leader Karina Gistelinck said that even with the decline in fertilizer prices, the $10.6 billion Canadian potash mine can still be profitable. Gistelinck stated that she expects the cost of producing potash at their Jansen mine to be lower than that of fertilizer giants Nutrien (NTR.US) and the American Mosaic Company (MOS.US) at their top Canadian mines. She said that the business's large scale and BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs's significant investment in automation are key to keeping costs low and making it more competitive than other mines in Canada. Gistelinck said, "Our strategy is to create the most cost-effective mine possible. Even with low prices, we can still make a profit." Despite a more than 60% drop in potash prices from two years ago, BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs remains optimistic about the Jansen mine. Early in 2022, concerns about supply disruptions due to sanctions on Belarus and the Russia-Ukraine conflict caused a spike in potash prices. Canada, Russia, and Belarus account for two-thirds of global potash trade. As early as August 2021, the world's largest mining company pledged $5.7 billion to build the first phase of the Jansen project in Saskatchewan, western Canada. Two years later, confident in the potash market, BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs allocated another $4.9 billion for expansion. Since the approval of the Jansen mine, fertilizer exports from Russia and Belarus have rebounded, lowering potash prices. BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs's flagship mine is expected to inject millions of tons of new supply into a balanced market. Gistelinck said the first phase of the Jansen potash project is expected to start production in 2026, producing 4.2 million tons of potash, increasing global potash supply by 5%. When the project is operating at full capacity in 2031, production is expected to double. She expects the production cost of Jansen potash to be below $140 per ton. She stated that market prices are expected to be between $300 and $450 per ton. BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs plans to sell fertilizers to distributors rather than directly to farmers. Gistelinck said that BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs is also considering offering discounts to capture market share. She said that BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs is targeting Brazil, Southeast Asian countries, and the United States as their main markets for selling potash. Gistelinck said that with population growth, demand for crop nutrients is expected to grow at a rate of 2% per year over the next two years, and external factors such as climate change may also drive fertilizer consumption. She said, "Disastrous events will become more frequent and last longer. Potash will be of great help in the recovery of Shenzhen Agricultural Power Group."