Sandvik wins SEK2bn Canada potash contract from BHP
Sandvik Mining and Rock Solutions has won a SEK2bn contract from BHP for the Jansen Potash project in Saskatchewan.
The Canadian contract follows several years of close collaboration with BHP to develop the underground mining equipment and automation solution.
The delivery period of the equipment is expected to start in Q3 2023 and extends to 2026. An order value of approximately SEK500mn will be reported in each of the first, second and fourth quarters in 2022, as well as in the second quarter of 2023.
The Jansen project has the potential to be the largest potash-producing mine in the world and is expected to operate for up to 100 years, providing a rich source of potassium for soil fertilisation purposes and hence supporting food production. Production is targeted to start in 2027.
BHP has made a US$5.7bn investment in the Jansen Stage 1 project with the mining giant forecasting 4.5Mtpa.
Sandvik Materials Technology has received a major order for advanced tubes for the energy segment. The order, booked in Q1, is valued around SEK800mn, with deliveries scheduled between 2023 and 2025. “Securing this contract is a proof point of our long term value proposition and reliability as a supplier for major contracts”, says Henrik Ager, President of Sandvik Mining and Rock Solutions.
Sandvik has completed the previously announced acquisition of the German based company Gerling, a precision tube engineering company serving multiple industries including the fast-developing hydrogen market. The offering includes innovative engineering solutions, such as high-pressure control technology in hydrogen refueling stations. In 2020, the company had revenues of approximately SEK90mn.
Booming demand for potash as global food supply chain demands intensify
BHP believes demand for potash could double by the late 2040s, by which point it could be a US$50bn market. As an essential nutrient for plant growth, potash is a vital link in the global food supply chain. And the demands on that supply chain are intensifying; while cultivated land area will remain almost static, the global population will be close to 10bn by 2050.
Not only will there be more mouths to feed but also rising calorific intake comprised of more varied diets, both of which increase the strains on finite land supply. Between now and the middle of the century, food demand will grow by 50% and sustainable increases in crop yields will be crucial if we are to continue to feed the world.
Advances in farming practices, farmer education and new seed varieties will all help to optimise yields in the future. But as the quantity of production grows, so too does the amount of potassium removed by harvesting – and the sustainable, targeted use of potash fertilisers will be critical in replenishing soils.
