(Bloomberg) — BHP Group expects its $10.6 billion potash mine in Canada to make money even with weakened fertilizer prices, says the head of the project.

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Jansen mine is expected to produce potash at costs that are less than the top Canadian operations of fertilizer giants Nutrien Ltd. and Mosaic Co., according to BHP’s Karina Gistelinck. She said the massive size of the operation and BHP’s heavy investment in automation are key to keeping costs down to be more competitive than other mines in Canada, the world’s top supplier.

“The strategy is to be the most cost-effective mine possible,” she said in an interview. “Even with depressed prices, we’ll be profitable.”

BHP remains optimistic on Jansen even though potash prices have tumbled more than 60% from highs seen two years ago. Prices soared in early 2022 after sanctions on Belarus and Russia’s war in Ukraine stoked fears of supply shocks in a tight market. The two nations are among the top producers of potash and, combined with Canada, account for two-thirds of the global trade.

The world’s biggest miner had already committed $5.7 billion to building the first stage of Jansen in the western Canadian province of Saskatchewan back in August 2021. Two years later, BHP earmarked an additional $4.9 billion for an expansion due to its confidence in the potash market. The spending is on top of an earlier $4.5 billion investment in the area.

Since Jansen’s approval, flows of fertilizer from Russia and Belarus have rebounded and driven down potash prices. BHP’s flagship mine is now expected to pour millions of fresh tons into a balanced market rather than one crying out for new supplies that BHP had anticipated.

Jansen is expected to deliver 4.2 million tons of potash when the first phase starts production in 2026, adding 5% to the current global potash supply, according to Gistelinck. Output is expected to double by 2031, when the project reaches full capacity.

Gistelinck said she anticipates Jansen will produce potash for less than $140 a metric ton. Market prices are expected to range from $300 a ton — in the worst-case scenario — to as high as $450 a ton in the medium to long term, she said.

BHP plans to sell the fertilizer to distributors rather than directly to farmers. The company has already secured commitments for its full potash production, which are expected to become binding contracts next year.

The Melbourne-based company is also mulling initial discounts to gain market share, Gistelinck said.

BHP is targeting Brazil — an agricultural powerhouse that’s highly dependent of fertilizer imports — as well as Southeast Asian nations and the US as major markets for selling its potash as it seeks to reduce exposure to China, she said.

Gistelinck sees demand for the crop nutrient rising 2% annually over the next two years, tracking population growth, while external factors such as the impacts of climate change could also boost consumption.

“Catastrophic events will happen more often and for longer,” she said. “And potassium helps a lot with the resilience of agricultural products.”

–With assistance from Thomas Biesheuvel.

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