Port, BHP Working on Potash Facility Lease

By Aaron Corvin, January 23, 2014, The Columbian


The Port of Vancouver’s 218-acre Terminal 5 is the proposed site for an export facility to be built by Australian mining giant BHP Billiton. (Bergman Photographic Services)

The Port of Vancouver still wants potash.


More than three years after the world’s biggest mining company, BHP Billiton, selected the port as its preferred site for a facility to export potash — a crop nutrient — the two parties remain in negotiations over the terms of a long-term lease.


Theresa Wagner, the port’s communications manager, said this week that port Executive Director Todd Coleman is expected in February to extend talks to mid-May. The hope is to have a final, 30-year lease agreement in place by mid-2014, Wagner said.


“At this point, we still haven’t finalized lease language, so we’re still working through it,” she said.


At stake is a project that’s expected to generate thousands of temporary construction jobs, trigger at least $250 million in private capital investment and lock in a lucrative lease arrangement for the port.


The export facility planned by Melbourne, Australia-based BHP Billiton won’t generate many permanent jobs. One company official has pegged it at about 40 full-time positions. For the port, however, the project would significantly boost the freight it manages. Currently, the port handles about 5 million metric tons of cargo annually. BHP Billiton expects to ship 8 million metric tons of potash annually from the port.


The port could spend the revenue generated by the potash deal on expanding rail and other infrastructure to spur economic growth.


“It’s a game-changer,” Wagner said.


‘On schedule’

BHP Billiton could eventually lease up to 95 acres of the port’s 218-acre Terminal 5, where the company wants to build an export facility to ship potash, a fertilizer ingredient that environmental regulators consider nontoxic to aquatic organisms. The company would ship potash by rail to the port, where it would then be loaded onto ships bound primarily for Asia. The company would haul the potash from the Jansen mine it’s developing in Canada’s Saskatchewan province.


In a news release BHP Billiton issued Jan. 22, the company said its $2.6 billion project to finish the excavation and lining of the Jansen mine’s production and service shafts “is expected to resume in February 2014.” The company also said: “The staggered manner in which we are progressing the production and service shafts allows us to mitigate risk and optimize their development. The project remains on schedule and budget.”


While they haven’t sealed the deal, the port and the company have made progress, including securing a preliminary lease arrangement, and agreeing to site improvement and entry deals. The last component to wrap up is a final lease contract, which would need approval by the port’s three-member board of commissioners.


The port had hoped to have that document in place by the end of last year. A weak global economy has, in part, contributed to the delay.


The potash project could be under construction anywhere from one to two years after the lease is approved, Wagner said in an email to The Columbian. Timing is “dependent on the mine’s progress and the global market,” she said.


Initially, BHP Billiton’s operation is expected to encompass up to 45 acres, with the potential to add 50 acres as expansion occurs, for a total of 95 acres.


The port anticipates securing a 30-year lease that would give the company the option of four 10-year extensions. The potash-export project would include handling, storage, dock and rail facilities. BHP Billiton chose the port as its preferred site in June 2010.

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