August 22, 2012 / 8:43 PM / 5 years ago

BHP may double Canada potash mine's 1st phase output

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WINNIPEG, Manitoba (Reuters) - BHP Billiton is making plans to double the first phase of production on its proposed Saskatchewan potash mine to 4 million tonnes, even as a decision on proceeding with the project is delayed, a company spokesman said on Wednesday.

Earlier in the day the company said that no major projects, including the Jansen, Saskatchewan, potash mine, would be approved before June 2013.

BHP is studying the expansion of its first phase to 4 million tonnes, which will require further engineering design work, spokesman Ruban Yogarajah said in an email comment.

"The additional engineering work will have some impact on the date of first production, but until that work is complete we cannot speculate what that the impact is," he said.

"We see Jansen as the first project in what will eventually become a large business for BHP Billiton based in Saskatchewan."

BHP has been aiming to start production on the 8-million-tonne mine - which would be the world's largest potash mine - in 2015.

Saskatchewan and BHP officials spoke by telephone on Wednesday.

"I think what was announced for Jansen Lake in terms of the project is, comparatively, quite encouraging," said Premier Brad Wall, Saskatchewan's top politician, in an interview with Reuters.

"If someone were to go by Jansen Lake today, or I would argue a couple of months after, and there's 100 more people there, I don't think delay would be the first thing that would come to mind," Wall said.

BHP delayed three projects as its second-half profit slid, less than a week after rival Vale SA delayed its own Saskatchewan potash project.

While it will take longer for BHP to make a final decision on Jansen, work by about 400 people on site will continue in the meantime on digging two mine shafts and building surface facilities, Yogarajah said.

Saskatchewan holds an estimated more than 40 percent of the world's reserves of potash, a key nutrient for growing corn and other crops.

BHP's changes to its Saskatchewan project might have delayed various permit approvals anyway, Wall said.

The mine would challenge existing potash miners in Saskatchewan, which include Potash Corporation of Saskatchewan, Mosaic Co and Agrium Inc.

Germany's K+S AG has started work on a new potash mine in the province as well.

Reporting by Rod Nickel in Winnipeg, Manitoba; editing by John Wallace and Bob Burgdorfer

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