Saskatchewan's giant Jansen potash project seems just a signature away from final approval, but don't hold your breath on a decision from the board of BHP Billiton Ltd.
The world's largest miner is working on the production and service shafts, which are the longest lead items of potash-mine development.
The $14-billion project still needs a green light on design engineering after deciding to double initial output on Jansen.
"We are finalizing this design engineering as part of the Jansen project feasibility study, which will be presented to the BHP Billiton board," said company spokesman Ruban Yogarajah. "While this occurs, we will finish building the camp and continue shaft excavation and site preparation."
Once built, Jansen is expected to be the world's largest potash mine, dwarfing even those of BHP's nearest rival, Potash Corp. of Saskatchewan Inc., which has mines nearby.
The mine, set in flat prairie lands about 150 kilometres southeast of Saskatoon, is a bet by BHP Billiton that potash, a crop nutrient, will become the world's most important mined commodity as global food demand rises with new demand from emerging economies, where increasing affluence is changing eating habits.
Already two of the world's top buyers are India and China, each with a rapidly growing middle class and a ravenous appetite for all commodities.
The company has already spent about $2-billion on Jansen, but there is some question about future funding after BHP Billiton put all new major project approvals on hold last year in the face of an increasingly murky outlook for commodities markets.
There is little doubt that Jansen will go ahead – and it may be able to resort to some so-called 'precommitment' funding as it awaits board approval – but the massive project will go before the board at a time when other projects have been shelved, by BHP Billiton as well as other global miners.
Just last month, even as potash prices hover at levels about half where they were just a few years ago, the Brazilian mining giant Vale SA suspended a $6-billion potash project in Argentina, saying it did not fit with the company's commitment to capital discipline.
That may actually be good news for BHP and other new market entrants because it means less new production will come on stream, alleviating concerns that Jansen would flood the market when it does start output at 4 million to 5 million tonnes of potash a year, eventually reaching as much as 9 million tonnes.
"BHP has already made a large dent in its capex plans with the postponement of the Outer Harbour and Olympic Dam phase 2; Jansen is the last mega-project standing and will likely be submitted for board approval by H1/CY14," RBC Capital Markets said in a research note on April 10.
Even so, it's business as usual for the time being at Jansen, where high-tech borer machines are being used to dig two shafts to points about one kilometre below the surface.
On site there is no indication the company is on the verge of shelving what it has long-touted as a 70-year bet on the future of potash demand. Some 380 workers and engineers are busy toiling away on tasks ranging from the construction of a barracks to pumping cooled brine 500 metres below the surface to freeze aquifers so that borers can cut through them to access the potash below.
Graham Kerr, BHP Billiton's chief financial officer, told a Bloomberg economic summit in Australia last week that a decision on building Jansen "will probably come to the board next financial year."
Contrary to some market perceptions, that means a decision could come any time between the start of the fiscal year on July 1, and its end on June 30 next year.