Diversified major BHP has approved $5.7-billion (C$7.5-billion) in capital expenditure for the Jansen Stage 1 potash project, in Canada.

The investment is aligned with BHP’s strategy of growing its exposure to “future facing” commodities, CEO Mike Henry said on Tuesday, while also announcing BHP’s exit from oil and gas through a merger of those assets with Australia’s Woodside.

The Jansen final investment decision comes more than a decade since the company first started work on the giant potash mine, in Saskatchewan. To date, it has invested $4.5-billion on shafts and associated infrastructure, as well as engineering and procurement activities and preparation work for underground infrastructure.

BHP conceded that its approach would have been different if the project was started from scratch today.

Nevertheless, an investment in potash would create value for shareholders for generations, Henry said, noting that Jansen would operate for up to 100 years.

"In addition to its merits as a standalone project, Jansen also brings with it a series of high returning growth options in an attractive investment jurisdiction,” he said.

The Stage 1 operation will produce 4.35-million tonnes a year of potash, with first ore targeted in 2027 – more or less in line with when a gap for new supply will emerge.

Product will be shipped to export markets through the Westshore terminal, in Delta, British Columbia.

BHP and Vancouver-based Westhore Terminals last month signed a conditional agreement on port access, which was a prerequisite for the mining company to proceed with the project.

Construction will take about six years, followed by a ramp-up period of two years.

Jansen will create at least 3 500 jobs during peak construction and 600 in operation. The project will have a gender balanced workforce and about 20% of employees will be local First Nations members. 

“In construction and in ongoing operations we will continue to enable local and indigenous businesses. Building on our more than ten-year presence in Saskatchewan, we have signed agreements that provide tangible mutual benefits including jobs and training, small business development and procurement with six First Nations communities around the site, the first of their kind in the potash industry. We appreciate the support we have received from the federal and provincial governments to encourage investment in the country and province,” said Henry.

The investment decision would generate an internal rate of return of 12% to 14% and an expected payback period of seven years from first production.