BHP(BHP.US): Middle East Conflict Impacts Supply, Potash Faces Shortage

According to the Tonghuashun Finance APP, BHP (BHP.US), the world’s largest mining company, expects the global potash market to tighten over the next decade due to rising demand and geopolitical risks that are putting pressure on the fertilizer supply chain. With demand for this crop nutrient growing by 2% to 3% annually, aside from BHP’s Jansen potash project, other supplies are limited.

The fertilizer supply disruptions caused by the Middle East conflict have worsened the situation, with farmers worldwide competing to secure key nutrients. Karina Gistelinck, head of the company’s potash business, stated that a market gap is expected by 2035. “We anticipate tight market supply and significant pressure on the supply side,” she said in an interview on Tuesday.

The Jansen project in Saskatchewan, Canada, is scheduled to start mid-2027, with an annual capacity of 4.1 million tons within two years. The second phase is expected to increase production to about 8.5 million tons early in the next decade. Gistelinck is seeking to convert preliminary commercial agreements into binding contracts in Brazil to finalize before Jansen’s launch.

This South American country relies almost entirely on imported potash and is expected to become a key market, accounting for about 20% of global demand. The mining company also targets Southeast Asia, China, India, and the United States as major buyer markets.

BHP executives stated that the cost of the Jansen potash project far exceeded expectations, with the first phase estimated to require an investment of $8.4 billion, and the company has “learned painful lessons.” She compared potash to BHP’s “future iron ore,” indicating the company’s ambitious goal to develop a significant new profit engine.