Hello, everyone, and thank you for joining us. A month ago, we announced the sanction of Jansen Stage one. Today, the team will provide you with an in-depth look at all aspects of the project. Today's briefing will have two sections. The first will cover the potash market market outlook, potash marketing and an introduction to Jansen.
After a short break, we will then do a deep dive into stage one and social value before we move to question and answers. If you haven't seen the Jansen video, I'd recommend recommend you watch it during the break as it really brings the project to life. We sent the link to the video with the reminder email, and the video is on our website. As just said, for those who would like to ask a question, you will have to register using the Q and A teleconference link on the reminder e mail and dial in using the phone number provided at registration. You have plenty of time to do this, though, and we will remind you of the link when we get to that point.
I'll now hand over to Raghud, President Minerals Americas, to begin the briefing. Over to you, Ragh.
Thanks, Tristan. Hello, everyone, and thank you for joining us today. We're excited to have the opportunity to take you through a deep dive into the recently approved Janssen Stage one project after a fairly long study period. Now at BHP, we're focused on making sure we have a portfolio that is future fit and positioned to generate value and returns for decades to come. There is a growing recognition of the critical role facing future facing commodities play in the energy transition and in ensuring a sustainable world for future generations.
We're convinced that the megatrends of decarbonization, decarbonization, electrification, population growth, and higher living standards will drive strong demands for many of the commodities we produce. And there will be an increasing call for these commodities to be supplied by companies with a track record of sustainable operations and strong social value creation. BHP is one of those companies. Now BHP's approval of Janssen Stage one marks BHP's entry into the world's best potash basin and opens up a new future growth front for the company with significant potential expansion opportunities, which is expected to support up to a century of production. Jansen Stage one will be the most advanced potash mine ever built.
The very latest technology and sustainability practices are being built into its design. It will be very difficult, if not impossible, for existing potash miners to retrofit and recreate the operational advantages that we will capture. Potash is an essential input in supporting the agricultural production required to feed a growing population and in improving farming practices. It facilitates a better, more diversified diet and reduces the environmental impact agricultural production. Now when we consider Janssen, one of the big questions we asked ourselves in approving Janssen Stage one was, does it fit within our strategy?
A strategy to own a portfolio of world class assets exposed to highly attractive commodities and to operate them exceptionally well. This is designed to deliver exceptional value and return throughout the cycle. Now the first element we take a look is the attractiveness of a given commodity. That tends to be determined by the market size, its demand drivers, and the supply landscape, including the steepness of the cost curve, a really important element for us. All of this plays into our ability to capture meaningful and growing rent.
We then look for assets that are large, long life, high margin, and expandable. What this does is it helps us to realize economies of scale and produce strong cash flows throughout the cycle. And it also allows us to apply different technologies over time and, of course, provide high return growth optionality. Finally, any option has to align with our capabilities in order for us to unlock the full potential we know these assets have. For BHP, this means mining, processing and bulk logistics as well as the creation of shared value for both our shareholders and the environment in which we operate.
Now we are actually exceptionally deliberate with this criteria. And while we know the framework sounds simple, it is proven to have generated strong value and returns for our shareholders, and you can see examples of this throughout our history. As you'll hear from us today, potash is a commodity we like. Janssen is an attractive asset, and the capabilities of our team will extract the most value from it. Now the addition of potash and Jansen to our portfolio also provides diversification benefits.
The demand drivers for potash differ from other commodities in our portfolio. As I touched on earlier, potash is leveraged to global megatrends, including population growth and rising living standards. And it also further benefits from more rapid decarbonization. The customer base that we have in potash or will have in potash is more globally diverse existing BHP portfolios and is skewed towards a sorry, which is skewed towards Asia. It also diversifies our operating footprint into Canada, a highly attractive and stable mining jurisdiction.
But of course, every one of our projects must stack up against the other attractive development options in our diversified portfolio and returns to shareholders. We do this through what we capital allocation framework. Janssen Stage one has an attractive risk return profile. Our knowledge of the ore body, combined with the application of the latest technology and processes, will result in low first quartile operating costs and support 70% EBITDA margins on consensus prices. At consensus prices, Jansen has a seven year payback from first production and generates a healthy 12% to 14% IRR.
We are confident that Janssen will generate strong cash flows and returns for decades to come. Now we've also designed Janssen Stage one to have competitive advantages from the outset. This began with our appraisal of the ore body. Giles and the team are gonna talk to you a little bit later on about the modern three d seismic technology that we've used to gain a detailed detailed understanding of the total resource. This was not available when some of the other potash mines in the basin were developed thirty to forty years ago.
What this has allowed is for full life of mine planning, unlike some of the other operators in the basin. Now Janssen is designed to require 60% less equipment, which will reduce our operating cost by about 10% from the outset. We've also designed Jansen to be as sustainable as possible and are already working on how to make it even greener. Now while Jansen will be our first potash mine, we know we bring a wealth of experience and world class capability in bulk mining. And we have a strong history of marketing high quality commodities in global markets, which has helped us to put in place MOUs for up 100% of production from Stage one.
Now while compelling in its own right, Janssen Stage one also unlocks up to a century of production and growth potential. Jansen's longevity is common to the assets investments that have enabled BHP to create strong value and returns for our shareholders over many years, including both in our Western Australian iron ore assets and at our Escondida copper mine. Now as we've demonstrated time and time again, good resources get better over time. Large assets with expansion potential provide inherent capital efficiency, high return expansion options for when the time is right. Now while each subsequent stage beyond Stage one will be subject to the disciplined allocation of our capital allocation framework, we have a path 16,000,000 to 17,000,000 tonnes of production at Janssen.
And the incremental returns are quite attractive, as you can see on the screen. What's more, each of these stages comes at a lower capital intensity, faster payback and with higher returns. So we've taken the time to study Janssen and establish the optimal path forward, and we look forward to sharing more about this exciting project with you today. Shortly, you're going be hearing more about the appealing market fundamentals that will be aided by some of the megatrends we are seeing playing out around the world and our approach to marketing Jansen's product. Then our team is going to pick it up from there, and they'll provide a detailed overview of our development plans that will leverage our proven capability.
But to begin with, I'm now going to hand over to Hugh, our Chief Economist, to provide you with a reminder of the market outlook for potash. Over to you, Hugh.
Very much, Rag. The key messages that I hope you will take away from this session are as follows. Potash is a future facing commodity that is positively leveraged to global megatrends, including decarbonization. Base demand is underpinned by very reliable drivers with attractive, attractive, plausible upside readily identifiable. While the industry is currently subject to excess capacity, the demand trajectory is expected to absorb this overhang over the course of this decade.
When that process is played out, with the market very likely to continue expanding in the following decades, a durable inducement pricing regime centered on solution mining in the Canadian Basin is the most likely operating environment for the industry in the 2030s and beyond. The fact that higher quality conventional development opportunities globally are mostly already executed underscores this view. Jansen Stage one and our overall resource holding in the basin are the exception to the rule. The BHP portfolio has traditionally been comprised of energy and metals. The drives of drivers of these commodities are well known to an audience like this one.
Potash, on the other hand, sits within a value chain where the fundamental drivers are more basic, slower moving, and boringly consistent across decade or time spans. The number of mouths to feed, the scale and scope of diets, and long run trends in soil fertility, and the associated interplay with fertilizer applications. Given the relative simplicity of these basic drivers, it should come as no surprise that the historical record of population growth, crop production, and potash demand provides a very reliable basis for projecting future fertilizer needs. All in all, population is up roughly 2.5 fold since 1960. Crops are up 3.5 fold, and potash demand is up four point fivefold.
These relationships are as law like as it gets in the commodity domain. Under our 1.5 degree scenario, which we disclosed in our climate change report last year, potash stands to be a winner with increased biofuel production and intensified competition for land due to afforestation. However, the impact of deep decarbonization on potash demand is best characterized as attractive upside on top of an already compelling demand case That can be easily seen from the robust demand emanating from the other scenarios depicted on this chart. Furthermore, potash does not generate some of the negative environmental impacts of the other two major chemical fertilizer nutrients. It is truly future facing.
Turning now to the market proper. The most important questions to consider are these. Number one, when will excess capacity be absorbed? Two, what might be expected in terms of inducement pricing when new supply is required to balance the market? And three, what sort of supply response is most likely under inducement pricing?
Will we see a new supply led wave emerge, driving pricing back down towards short run marginal costs for an extended period? Or will we see a durable, disciplined inducement environment with the possible additional benefit of occasional fly out pricing. Let me address each of these in turn. This chart provides an indicative range of demand outcomes by way of round figure CAGRs, an extension of the ten year linear trend, the average forecast of the specialist consultants, and the midpoint of incumbent producer Nutrien's publicly stated range of 2% to 2.5% for the 2020s. We've superimposed our own estimate of achievable production across the demand range.
I will define and quantify what we mean by achievable production shortly. Our central view is that demand will have caught up by the late 2020s or early 2030s. The chart illustrates clearly that this timing is not controversial. Now I'd like to clarify some of the terminology around capacity, which can sometimes be a source of confusion.
Unfortunately, there is no clear single definition
by which different producers report their capacity, if they report it at all. Nameplate capacity, which is the the first column on this chart, is often cited, but it's sometimes based on annualizing a sprint capacity, which is just not replicable day in, day out. Or it can fail to reflect limitations that have appeared over time as an asset has aged. And in potash, the major basins are very mature. Accounting for these realities, as well as for unplanned downtime, which we gauge empirically based on actual performance of assets, we estimate that the achievable production of the industry is about 76,000,000 tonnes per annum as of today.
Then we have some capacity that is under voluntary curtailment, and most of that's in Canada. And there's also a small portion that is currently uneconomic. And that takes us to expected production of only 71,000,000 tonnes in calendar twenty twenty. Now actual production last year was nearly 70,000,000 tonnes. And that shows you just how hard available capacity is presently being run to make the big jump in demand that we have observed.
So paradoxically, the potash market is both supply constrained and suffering from excess capacity in this mini cycle. So looking forward, we assume that capacity that can be reutilized will be and is brought back ahead of market balance being achieved. Plus, there is new capacity either under construction or already in ramp up, such as the Petrocot project in Belarus, which reportedly commissioned this quarter. Working on the assumption that all of this does become available, we think that future achievable production could be up to 86,000,000 tonnes per annum, and that is without factoring Janssen Stage one or currently uncommitted investments by other players. It also does not take into account depletion, which will become a considerable factor in the 2030s and beyond.
Now at linear trend growth and demand, that 86,000,000 tonnes of supply will be absorbed by the late 2020s. If the pace of demand we've seen over the last eighteen months were to keep up, it would be much sooner than that. Or if you take the average of the three specialists, it happens in the early 2030s. Somewhere in that window, we have firm conviction that additional capacity is going to be needed. So prior to this structural balance point being reached, we expect prices to cycle at or slightly above forward looking estimates of short run marginal cost, which is similar to the average prices seen since 02/2014.
Now that does not preclude the possibility of price upsweaks. We're in the midst of one right now after all. It just implies that while excess capacity is present, prices are unlikely to sustain at or above inducement levels. Once structural balance is achieved, though, with demand continuing to move upward, new supply will obviously be required. At mid case macro assumptions, our estimate of the inducement price for the most likely consistent source of greenfield supply, which we have identified as a large bench of Canadian resource suitable for solution writing.
Well, that inducement price turns out to be similar to the average price realized over the last dozen years, which is in the mid 3 hundreds. Our view is that average prices for the period 02/2013 are a reasonable proxy for what could emerge under future episodes of fly up pricing in this industry. Recent experience has pushed realized pricing into precisely this zone. So why then might prices fly up in future? The first reason is that by the time the industry reaches the balance point we discussed above, there will be few high quality conventional development opportunities available should demand then surprise to the upside.
Which begs the question,
why then might demand surprise to the upside in a sustained way? The future yield impacts of soil depletion. That's why. We know that natural soil fertility has declined. What we do not know is when this fact will begin to influence farm behavior and how smooth or abrupt the change might be.
If farm behavior were forced to change overnight due to a disruptive event like a multiregion crop failure, that in turn could lead to a stepwise increase in potash demand. That would take producers a considerable time to catch up to, given the maturity of these large but venerable basins, where the vast majority of the available brownfield and lower cost greenfield opportunities were executed in response to the last price upswing.
So to be clear, we
are not planning for precisely the above scenario to occur or bold enough to time it, but we are certainly cognizant of the possibility of fly up pricing being a recurrent feature of this market as the decades unfold. To us, when seeking to identify the skew of risk around the central case, the upside seems like a far more reasonable hypothetical than the situation where a new supply led wave emerges. The geological and agronomic cases for this back to the future vision of potash are weak. We hope that these brief remarks have provided you with some useful insights in advance of the project deep dive in our marketing strategy. To recap very quickly, Number one, potash is a future facing commodity.
Two, base demand is reliable with attractive, plausible upside. Three, excess capacity is expected to be absorbed over the course of this decade. Four, the 2020s, we expect the long run marginal cost of the Canadian resource suitable for solution mining will set long run trend prices. The alternative that we trade at short run marginal cost more often than not due to a perpetual supply overhang, that's just far less plausible, given the narrow range of high quality conventional development options the industry has available to it. And once again, neither the geological nor the agronomic case for this view stacks up on a probabilistic basis.
And with that, I will hand over to Mark Swan, our Head of Sales and Marketing for Potash.
Thank you. With respect to Potash Marketing, I would like to talk about four key topics. First, for context, provide an overview of fertilizer products and how the potash market works. Second, explain how Janssen's competitive advantages have helped shape our marketing approach. Third, share where we intend to sell our product.
And fourth, describe how improving market conditions and our diligent preparation will underpin our successful entry. So first, let's start by looking at fertilizers, potash, and MOP, quickly recapping on some of the key points that were covered in the June potash reading. Crops need 3% of nutrients to grow, nitrogen, phosphates, and potassium. These all perform different functions in a plant's development and are not interchangeable. Soils naturally contain varying amounts of nutrients, but to achieve high yields, modern agriculture relies heavily on nutrient rich mineral or chemical fertilizers.
The term potash refers to any fertilizer containing potassium. This often also used to refer potassium chloride or muriate potash, which we'll refer to today as MOP. Besides MOP, other forms of potash include potassium sulfate, SOP, and various potassium magnesium fertilizers, including polyhalose. These products are somewhat niche and typically only apply when a farmer is looking for a low chloride product or secondary nutrients like magnesium. Farmers are usually just looking for an economic source of potassium, and when that's the case, they usually end up buying NOP.
The most NOP demand is for agricultural standard or fine or granular product. Standard fine MFP is preferred across much of China, Southeast Asia, and India and is used for direct application by hand or machine or as a feedstock for making other types of of potash fertilizer. Grainly MFP is preferred across The Americas, including Brazil and The USA, and is used directly in bulk blends in large scale mechanized farming. Now agriculture MFP is usually red, but it may also be white. This is governed more by production methods than by demand, although there are some exceptions, notably in certain parts of China, by example.
Now some producers have numerous niche MOP products in their portfolio to suit all needs, while others sell fewer grades. Janssen itself will sell an agricultural grade red granular and red standard MOP, giving BHP access to the market, and the majority of the market in the agriculture sector. At this time, I'd also like to remind you that MOP has a smaller environmental footprint than other primary fertilizers when consumed as well as in production that you'll hear more about later. Now the potash market is projected to be around £70,000,000 in 2021, representing over $20,000,000,000 in value. The FFP market is different to other quantities we operate in, and there are many customs and practices and exceptions that are important for us to understand.
Because of this, BHP established a dedicated product marketing team in 2016 to build a practical understanding of how the potash market works. This team is recruited and consulted with many industry experts who collectively have well over a hundred years of firsthand experience marketing and distributing potash. We start by looking at the beginning of the value chain on the left hand side of this slide. Around 65% of supply is represented by four producers. A little less than 20% is sold by Camperfects, which is a joint venture for Nutrien and Mosaic that handles their sales outside North America.
Now some larger producers flex utilization rates at different lines depending on the market, and this is a practice that seems entrenched at least for now. If we move down the value chain to the middle of the slide, producers collectively sell the vast majority of our MOP on a CFR basis, typically as a standalone product directly to independent bulk buyers utilizing regional offices and sometimes agents. Producers typically sell to well over a 100 buyers that collectively form a diverse and competitive demand pool. LOP producers typically have geo diverse sales books, which help to balance regional demand offtake variation that occurs due to local weather conditions, seasons, or crop economics. Now commercial CFR contracts have many terms that are common, and they're commonly used across other commodities, like shipping terms, for instance.
But there are some terms that are peculiar to the MOP market. While all these terms are important to buyers and sellers in the market, most are not material to investors, so we won't go into them today. However, we should expand a little bit on how MOP pricing works given published FOB prices are estimated from CFR prices and are not representative of achievable producer netbacks. Now CFR prices vary by product and region and are agreed bilaterally, and reported prices are published in ranges and include freight and a gross of customary discounts and rebates. To calculate an achievable average netback at a b price, you need to adjust for the factors I've just mentioned, and we provide a little more detail on this in the appendix of the day's slides.
Also worthy of note is the duration of fixed price terms. These tend to vary by region, ranging from a shortest cargo by cargo in some regions to as long as 12 in, say, India or China. On the right hand side of the slide, we look at the final part of the value chain. Post CFR logistics found from discharge port to hundreds of millions of farms around the world. In market supply chains can be complex, but vertical integration is not a prerequisite selling bulk For the most part, in market distribution is disaggregated and managed by many independent downstream entities.
Barrows to entry are often low and margins typically smaller than those captured further upstream. Where producers do choose to sell a portion of their production by their own distribution, manufacturing, retail assets, it's usually done when they want to capture downstream synergy from selling other fertilizers, agricultural products, and or services. Even in regions where potash producers are particularly active downstream, such as The US or Brazil, the majority of in market supply chains remain independently owned. Our marketing approach has been designed to ensure competitive access and sustainable sales whilst playing for Jansen. BHP is new to potash, but we will, in time, become one of only few established sellers.
Largely spoken to welcome a new entrant that can help them diversify their supply and support their growth. Gelts will provide customers with up to a hundred years of low cost MOP that will be competitive through the cycle. If you look at logistics, like other established sellers, we will focus on upstream CFR sales. We will also benefit from being able to direct rail to the North American market. Doug Johnson has logistics optionality and flexible granular processing capacity that means we'll be able to shift sales between export markets and North America depending on the market.
By staying upstream, we can focus on highest margin part of the value chain and play for the strengths we already have in export bulk marketing and seafreight. During stage one, we will benefit from only needing to produce, handle, and sell two parts. Our location and environmental and social value leadership are proving attractive to buyers' emerging needs. In particular, with geopolitical risks rising, buyers are increasingly valuing the long term stability that supply from Canada offers. Our contracting approach will be competitive, and the vast majority of sales are likely be made against framework agreements with prices fixed in line with regional prevailing customer practice.
Finally, once established, our marketing team will be positioned to capture incremental demand growth to support any future potential expansions as and when required. Once Gadsden's fully wrapped up, we'll be operating at 4,300,000 tonnes per annum, and we forecast our market share will peak at around 5%. We will target dozens of large buyers across growth regions in The Americas, Asia, and the rest of the world, by example, Africa, noting we will be underweight in China given our exclusive red prop product offering in stage one. We will also sell some volumes into The US and other smaller established markets. For illustration, we show what Janssen's potential regional share of imports may look like on this slide.
Now actual sales will depend upon various factors, including regional netbacks, logistics costs, reliability of customers, and location diversity, and will vary over time. The key point here is that we will always want to retain geographic and customer diversity to ensure competitive global access and average out regional demand variation and price netbacks. Now as Rag touched on earlier, Janssen stage one will bring some diversity to BHP's business. By example, China accounts for more than 70% of global iron ore imports, but only around 15% of potash imports. And there's zero overlap with existing customers in
Now entry risk is only present for a relatively short period of time at the beginning of the Janssen stage one, but it's still something we're planning for. Over the past five years, as well as building an experienced team, we have spoke to hundreds of customers and developed working relationships with most major product buyers. Many of these buyers have put strong support for the project. We have subsequently agreed nonbinding MOUs with key strategic buyers that collectively provide for up to a 100 of BHP's planned output in stage one. Interest levels have actually exceeded our stage one capacity, and in some cases, we captured some of this upside in mutual options that will explore further during execution.
We will replicate the tried and tested model of marketing directly to major customers by our network of regional offices, leveraging BHP's existing footprint and capabilities. Now the marketing team will be expanded to bring in more specific regional sales experience. So whilst BHP will be new to potash, the marketing team will not be. We expect Janssen will be structurally needed to balance the market. In ramp up, we will target multiple customers in each region, satisfy new demand wherever possible to support a smooth market entry and ensure the most competitive access and terms.
Many buyers tell us they're keen to diversify their existing supply and buy from us, and we're very encouraged by this. Now the marketing team's gonna have six years prior to entry and two years of ramp up to repair, monitor developments, secure sales, and ease ourselves into this market. And, overall, we think we should be well positioned to place all our product at competitive prices and sell through the cycle profitably under any market conditions. So if we just step back to reflect on the key points, BHP has an established practical understanding of the market to support sanction stage one. We have developed a sustainable marketing approach that will be optimized to our strengths.
We built an experienced team and developed relationships with many key buyers in the potash market who have demonstrated strong support and have indicated strong future demand for Janssen's product. And finally, diverse sales in an improving market underpinned by diligent preparation will help ensure a successful entry. So thanks to everyone for your time. I will now hand over to Jarth Halya, our vice president of product operations, who will give you an overview of the Jackson project.
Thanks, Mark, and it's fine, everybody. I've been responsible for guiding our project here locally in Canada through to approval and look forward very much to seeing the world's most advanced potash mine brought to life. At the outlook briefing in June, we talked about how Canada, and primarily in Saskatchewan. We're home to more than onethree of the global potash reserves. The Saskatchewan region is a key producer and has been so since the 1960s and produces around onethree of the world's clutch today.
Since 02/2008, BHP has accumulated a very large holding of land in the region. In fact, some 9,000 square kilometres, which represents around 37% of tenure in the basin. And in the diagram that's on the right hand side of the screen, you can get a good indication of that from the BHP orange colour, which surrounds many of the local mines and indicates where Jansen is. Jansen represents the best of its footprint in the world's best potash basin. I'll take you to some of the key elements around the project.
The US5.7 billion dollars capital expenditure or CAD7.5 billion, the go forward investment will have 35% of that going towards the mine. 45% of that capital will be allocated to above ground facilities for processing, and 20% will be to effectively take material from the logistics chain all the way across to the West Coast Of Canada to the Westshore Port. 85% of our expenditure will be in Canadian dollar terms. We're very confident in the estimates. We've been working in Canada now for a number of years.
We've been in the region here in Saskatchewan for fifteen years, and of course, we have a long history in Canada with our other operations. Engineering is over 50% complete to date. And if you think about that in terms of other projects which we've been doing in recent history at BHP, that is around a similar amount of engineering which we had completed for our STENS project in Latin America in Chile, and also the recently completed South Point project in Western Australia, the iron ore development. So Jansen is roughly at the same point that we were at the same time around the final investment decisions for those projects. Construction will take six years for Jansen, and the peak spend will be in years financial year 2025 and 2026.
Janssen will enter the market towards the bottom of the global cost curve, with operating costs of around about US100 dollars per tonne on an FOB Vancouver basis. And the other thing about this development is that it's going to support at least a century of future production growth with future expansions significantly derisked by the existing shaft capacity that's been installed at Janssen. It's also very important to realise that Janssen's been designed with sustainability in mind on day one. Stage one will have 50% less carbon per tonne emitted against the average producer in the Saskatchewan Basin today and approximately 60% less water freshwater consumption on the same basis. We've proactively lowered emissions of water consumption at start up, and we intend to go further as we ramp up production.
Firstly, I'll take you to thinking about the underground development. Emissions there, we expect, will be lower than any of the other producers by the fact that we have greater than 80% of the underground fleet's energy being supplied through battery or electricity. As stage one comes online, we plan to be ramping to full electricity and battery by 02/1931. We're not going to stop there, though, on path to net zero, which ANSON focuses on eliminating power generation emissions at the source and also mitigating the impact of natural gas consumption in the processing area. Because together, those two things make up 80% of forecast emissions from Janssen to Stage one.
The local government and the electricity utility that we rely upon shares very common goals, as BHP does, in reducing emissions. And therefore our strategy is very much about mitigating emissions from electricity by working with the local utility to provide purchase agreements such that we secure power from very low emission sources. And therefore, we are incentivising the local utility in further reducing or producing green electricity sources for the benefit of Saskatchewan and the province here. Turning to water. Janssen's lower water usage is driven by optimisation of the processing plant, and that's because processing and infrastructure technologies have been a key focus area for the design of Stage one to ensure we have that sustainable approach to local water supply.
So Jansen is very much positioned where it leaves our ability to outperform our peers in a way that we think is very, very unique. This is the first complete conventional mine developed and built in fifteen years. Janus is gonna be larger. It's gonna be simpler. It's gonna be in one location.
It'll have one production shaft and one service shaft, all in one location. At 4,350,000 tonnes per annum, it will be one of the largest producers from a single mine without considering future potential expansions. This, of course, creates economies of scale. Mining equipment has been matched to the ore body, and it includes 60% less fleet, resulting in fewer machines to operate and maintain. We also have a very well developed integrated support system that's been put in place for the highest levels of productivity to support those machines.
Automation has been integrated in the design from the start. It's not an add on. It extends from the mine all the way through to the port to the loading and unloading systems, which will be the best in class. It will require fewer people to operate equipment, making it the most productive in the industry on a tonne per person basis. Our modern processing plant design will set industry benchmarks.
It will have higher recoveries from a very unique flowsheet designed with reliability in mind, delivering higher run hours and increasing productivity accordingly. The flowsheet incorporates the best innovations already employed in the mature global product industry. These built in systems and equipment advancements provide efficiencies and value that cannot be replicated by retrofitting an existing mine. Sure, people may be able to take bits and pieces and put them into their facilities, but they won't be able to do this in an integrated way. We've also assembled what we believe to be one of the best mining sites in the world.
We spent the past decade bringing talented people to the project and people that know the industry and know the region and the markets. The mine is in the world's best basin. They feature best in class design and equipment, and our team will get the most from the resource by operating it exceptionally well. Over the past ten years, we've secured all major permits that were possible prior to sanction. This includes approval for the environmental impact studies that we've done and all the way through to conventional conceptual closure planning.
You will have heard last month that we struck an agreement with Westshore Terminals on the West Coast Of Canada. That will be our port to export Jansen's products. Port fees are essentially fixed for the long term, but export and domestic rail services and logistics costs will be subject to short term contracts with service providers. Finally, I think it's very worth noting that Sharp Progress is now 93 complete and on track for completion by the end of calendar year 'twenty two. Of course, Reg touched on this in the opening around Janssen's competitive advantage, and it's largely embedded in the optimised design.
So its intended nameplate capacity of 4,350,000 tonnes per annum is expected to be the lowest cost producer in Canada. Future stages of Jansen will strengthen the Stage one OpEx advantage through further economies of scale. And even if competitors improve continuously, we expect Jansen's advantages remain for many years to come. Our estimate of approximately dollars per tonne in operating cost in 2030 includes both contingency and escalation allowances, and sustaining capital is expected to be, on average, 15 per tonne. And the Canadian currency exposure is expected to be in the order of 85% per life of the mine.
We're confident in the estimates. The development has been reviewed by industry experts. They've been subject to extensive benchmarking, and they include potential inflationary pressures. So in conclusion, I just want to reiterate that Jansen represents the best of our substantive holding in the Basin. And Stage one is a very modern, high margin, long life expandable asset that's positioned to outperform peers.
We're well advanced on permitting and ready to unlock significant value as we move towards production. I want to now introduce some of the experts that we have here to participate in this section of the session. I wanted to introduce Cheryl Cooper in the table, who will present on the mining system. We've done a tremendous amount of work on this modern mining system, ready for chance. Mike Elliott will speak on shafts, processing plant and outbound logistics.
Simon Thomas will talk to us around project management. And on social value, we'll hear from Lindsay Brubblo. But before we get to them, I'd like to kick off this session by talking to you about our approach to site geology. HP is in the very, very enviable position of developing a world class resource with the benefit of modern technology and decades of local potash mining experience. From a resource perspective, there are two key advantages that arise from this position.
Firstly, we're able to optimise for value for the project over the entire life of the mine. And secondly, we're better able to avoid hazards, which include those that can result in and have resulted in unplanned water inflows, for example, in other operations. Since the potash industry started using three-dimensional seismic technology in the 1980s, no mine threatening inflows have occurred in the Saskatchewan potash industry that we're aware of. That three d seismic technology is technology that allows us to see into the ground like we could not do in any other way. I would also point out though that nevertheless with this technology, unplanned inflows have occurred elsewhere if it's not used, and they can become a very persistent threat requiring long life commitment to managing those risks.
The key advantage that we have is that we've surveyed almost the entire property before mining. And if you think about what that means, in this particular diagram on the right hand side representing the least of a chance of boundaries, It's an idea of scale that's in terms of width around 25 kilometres by 35 kilometres from top to bottom. It's a very expansive area of ground. This has allowed us to plan for and avoid hazards and quickly to replace, as I've talked about. But no other potash miner has developed such a complete and integrated view of their property ahead of first production.
Our detailed understanding has allowed us to plan the mine's layout to minimise infrastructure and optimise the mining sequence, which is very important from a mine perspective. And it paves the way for us to provide a reliable source of ore through the life of the mine. By comparison, operators that started mining decades ago at best relied on two dimensional seismic technology, which didn't provide the same level of resolution of data and understanding flat species, for example, and other geological features that we have been able to access decades later. So we've combined the decades long knowledge that exists in Saskatchewan's products industry with leading three-dimensional techniques to generate safe, productive mine design for Jansen. The extensive landholding and characteristics of the deposit supports a very large resource base for Jansen, with mineral resources totalling some 6,500,000,000 tonnes of grade 25.6% K2O or potassium oxide.
It's very sustaining. So in summary, the extensive and early coverage with the latest three d seismic technology creates a very key competitive advantage for Janssen and sets the foundation to build additional value, which I will pass to Cheryl to talk to you about from a mining perspective and how we've integrated mining equipment into this particular design. So over to you, Cheryl.
Thanks, Giles. Our underground production mining system for Jansen is designed specifically for our potash ore scene. If you pair that with our detailed understanding of the total resource that Giles just spoke about, we are positioned to extract maximum value out of the Jansen resource. The mining system is comprised of the Samvik MF four sixty full phase four miner and the Samvik P zero one forty extendable belt system. The system has been developed from existing technology, adapted and scaled up into a unique integrated mining system.
It has higher capacity than typical potash borer machines and feeds onto our underground conveyance network, which we have designed to handle this higher capacity. The bores themselves are sized to extract the highest grade of the Jansen potash seam in a single cut versus a less productive two cut benching method we would have had to use if Jansen had a typical lower profile bore. The cutting height can also be adjusted above the high grade potash zone for managing ground conditions such as clay seams in the mined roof that need to be cut out for stability while also minimizing ore dilution. In the picture, you can see the bore in its lowest height configuration. It will cut up to almost a meter higher than what is shown here, and the dotted white outline shows the relative size of a typical low profile bore with a fixed cutting height for comparison.
Janssen will have just four minuteing systems capable of producing the equivalent of 10 to 14 typical systems. This is a sustainable advantage with fewer active mining cases for lower operating cost. As was noted earlier, the 60% less fleet creates approximately 10% operating cost saving. We've been engaged with Savick for the past ten years in developing this technology in part to help derisk this new approach of using a higher capacity system. And over the past few years, we have been conducting a full scale underground trial in a salt mine in Germany, and this is a mine with similar mining method and or properties to Janssen.
We have seen the system in actual mining conditions. We understand how it operates, and we're confident in
the
technology. The underground trial has helped us resolve equipment issues typically experienced in early operation. We've improved system performance and will continue to complete enhancements prior to the final design of the Jansen fleet. And again, as noted earlier, we'll be using an underground mobile fleet of mostly battery powered electric vehicles. We plan for more than 80% of the energy used to power the mobile fleet to be from battery or electric.
If you include the mining system electric load, then it's closer to 95%. Beyond this, we are aspiring to eliminate diesel exhaust exposure from the underground environment. Thank you very much. I'll now hand over to Mike Elliott, Janssen's project director.
Thanks, Cheryl. The Janssen team can certainly tell you that shaft sinking is the most challenging part of building a potash mine in Saskatchewan because it involves excavation and lining through several water bearing formations. We are pleased to say that we're on track for the end of calendar year 2022, and completion of the shafts will remove our principal barrier to entry and significantly reduce overall development risk for the project. Our shafts are constructed to be completely dry by using a composite hydrostatic liner from the surface to beneath the lowest water bearing formation. In comparison, most other Saskatchewan mines have opted for less capital intensive construction by only building hydrostatic liners through the major water bearing formations, and as a result they experience residual seepage.
This is an important differentiator because dry shafts last longer, they are cheaper to maintain, and deliver higher annual hoist run times. Jansen's two shafts are also the largest in Saskatchewan, with a diameter of 7.3 meters, which is significantly greater than the next largest shaft in the province, around six meters, and the average in the province of five meters. Our investment in a larger diameter allows us to deliver stage one production through only a single service shaft, thereby reducing upfront capital. And then for future stages, a larger diameter allows us to have four skips in our production shaft versus the typical two, and increased ventilation to support a larger mine footprint, thereby giving us the potential to achieve 16 to 17,000,000 tonnes per annum of production from Jansen alone. Our peers' production in comparison is constrained at their mines due in part to smaller shaft diameters that deliver both ventilation and hoisting capacity, and they will have to continue operating multiple mines to achieve the same output as Jansen.
Now turning to our process plant. We have applied the latest equipment and digital technology to a proven potash flow sheet, And as a result, Janssen will set a new benchmark for plant automation, both within BHP and potash industry. As shown on the bottom right of this slide, we are planning to achieve an industry leading recovery rate of 92%, which is current which is higher than current best performers at 89%, and the Saskatchewan average, which is in the mid eighties. A higher recovery means we will extract more potash per tonne of raw ore, resulting in less product going to tails, better energy and water efficiency, and a lower operating cost per ton. Jansen will be controlled by an integrated remote operating center or IROC using technology that we've proven in our iron ore, coal and copper businesses.
This IIROC will be based in Saskatoon, and it will integrate our mining, processing, rail and port operations, allowing us to continuously improve the supply chain and better serve our customers. The iROC will be enabled by a single advanced control system and will analyze data from more sensors than any other potash mine. We'll have three times the number of process sensors and 10 times the number of machine health monitoring sensors than the last process plants constructed in Saskatchewan. Lastly, Janssen will keep the plant fed by an automated raw ore reclaim system that operates when the hoist cannot, and dual production lines that will run independent of each other. All of these features that I've just laid out contribute to a target plant uptime of more than 8,000 per annum compared to the seven thousand to seven thousand five hours per annum achieved by others in the industry.
Now shifting to our sustainable design. As Giles mentioned earlier, Jansen is expected to be one of the world's most sustainable potash design, a pot most sustainable potash mines. This comes from having both a low carbon footprint and low water intensity. Jansen will emit about half the CO2 per tonne of product than the typical Saskatchewan potash mine, thanks to technology that mitigates natural gas emission and our pursuit of electrification of mobile equipment. Then looking at water usage.
Compared to other conventional potash mines in Saskatchewan, and something that I'm really proud about, is that Jansen's water usage will be 60% less due to the use of dry dust control technology and automation that minimises freshwater usage. For future stages, and as part of our ongoing drive for lower emissions, we will continue to research technologies as a partial substitute for conventional flotation and drying, thereby reducing both natural gas and water usage. So let's look at the next step in the supply chain and how we get product from the mine to our customers. Looking firstly at the rail network. Jansen Stage one includes the construction of railway spurs linking the mine to the two national carriers here in Canada, Canadian National and Canadian Pacific.
We will use a dedicated fleet of 1,200 potash railcars for Stage one, destined for either Westshore's terminal on the West Coast or domestic distribution into The US. How Jansen will load these railcars is really exciting. Jansen will have an automated and continuous loading facility that uses robotics to open and close the top hatches through which each rail car is filled with potash. We will load and return a train to the mainline in about half the time of current benchmarks, thereby avoiding the need to uncouple locomotives and, more importantly, avoid the need to have our people work on top of railcars. And this is the sort of technology that we aspire to as it removes our people from potential harm whilst delivering an economic benefit.
And now turning to the port terminal. BHP has entered into a long term agreement with Westshore to construct and operate a dedicated potash terminal. We are proud to partner with Westshore. We're a long established bulk commodity operator and a premier deepwater location. The terminal has best in class rail access, which follows a route that avoids heavy rail congestion in the Vancouver region, which will deliver us more reliable cycle times than competitors who are tied to terminals in the more congested regions of the Port Of Vancouver.
Westshore will construct the terminal under a design build own operate agreement, and this agreement also captures exclusive expansion potential for Stage two and possibly the yacht. So putting together all of what you've heard from Giles, Cheryl and me, Jansen's competitive advantages are embedded in our research knowledge resource knowledge, mining method, shaft design, modern plant design with integrated technology. On top of this, we will embed BHP's approach to safety, to operational excellence and continuous improvement that you would have seen elsewhere around the group. Future stages of Janssen, if approved, will strengthen this advantage through economies of scale. So that is the Stage one design deep dive, and I now have the pleasure of handing over to Simon Thomas, our Vice President for Projects, who has recently joined us from South Flank, and will talk about the approach to executing Stage one.
Thank you, Mike. The team has given you a flavor of how the structural advantages are embedded in the Jansen design. I'll now join you to talk about how we will successfully deliver the project. First, let me step back. At BHP, we have recently delivered four major projects worth US7 billion dollars on time and on budget across iron ore, copper and petroleum.
For each of these projects, which span sustaining and growth options, we had a strong regional team focus. With global support from the Project Centre of Excellence and the global project management leadership team. This global support helps us maintain standards and importantly ensures lessons learned are incorporated into future projects. Lessons learned typically center on effective project delivery models, engineering performance, appropriate commercial practices, understanding the supply chain, active risk management and digital innovation. As Mike said, I've joined Jansen from Southland, the 80,000,000 tonne per annum sustaining iron ore project that achieved first production on schedule and on budget only a few months ago.
I headed up that project, and the key lessons that stand out for me are that if you're going to head into project execution with a robust study, having the right delivery partner, advanced engineering progress, sound knowledge of your contractor capability, and a team that is well established and embedded, then you are on a strong course towards success. Here at Jansen, we've used the front end study to be more advanced across these key success factors than I've seen for other major projects that I've been a part of. Jansen has built a team that draws on the most experienced people that we have in BHP in the capital delivery function. And we have enhanced that team by securing local potash experience that now makes up over 25% of our Saskatoon based workforce. Importantly, our team includes a strong representation of people with experience in underground potash mining, underground hard rock mining and major process infrastructure construction.
I hold a high level of confidence in our schedule and capital cost ranges for Jansen Stage one, largely because of the extent of studies and reviews conducted internally by BHP and by a high number of independent experts. Our scope has remained stable over the past four years and has been optimized. Our engineering and procurement is well advanced. Engineering has progressed to over 50% complete. We have more than 45% of our procurement packages into the market and awarded, including the long lead items like mining system, processing equipment and electrical equipment.
This project is in line with other successful BHP major projects at time of sanction. We've also drawn on knowledge from projects in the Saskatchewan Basin, Canada and the potash industry. We now have a strong understanding of our construction risk, what could impact our critical path and what drives productivity, especially in the underground construction. Cost risk has been studied thoroughly with a focus on our exposure to those high risk elements such as bulk material quantities, labor productivity, the Saskatchewan winter seasons, mining equipment ramp up rates, contractor capability and inflationary pressure or escalation. Finally, our ranging has determined a conservative cost contingency modelled in detail and calculated at a higher level than some of our more recent development projects.
Looking now to the project schedule. This is an integration of five critical work streams required to build a complete potash supply chain from deep underground mine to the port. Jansen has two construction peaks, the mine development and hoist modification works through 2023 to 2024 and then the process facility construction through 2025 and 2026. The integrated schedule has been fully reviewed by a team of subject matter experts, both internal and external to BHP, drawing on experience from the potash industry, global underground mining and large complex process facility construction. Our understanding of risk, our ranges and our opportunities are all well informed.
Jansen ended execution at an ideal time with few competing major projects in the mining and minerals industry and a low post the Canadian oil sands boom. Given this, we anticipate labor availability and labor cost exposure to be well within our ranges. So briefly to recap, we have a strong track record in major project execution in BHP, and we're confident in our capital budget and delivery schedule for Jansen. With that, I'll hand over to Lindsay Grumwald, Manager of Corporate Affairs, to take you through our social value. Thank you.
Thank you, Simon. The Janssen investment is the second largest foreign direct investment in Canada since 2015 and the largest in Saskatchewan in decades. For some of our local communities, First Nations near Jansen, this is a once in a lifetime opportunity and economic growth experience. The social value opportunities presented from this investment is what I'm pleased to speak to you about today. Over the past ten years, we have built roots and strong ties in Saskatchewan, which has been a positive aspect of our project journey for everyone here at BHP.
We are excited to be able to continue to support the local, provincial and Canadian economies while being a good corporate neighbor. During this time, we have worked with valued stakeholders and communities to learn more about their needs and find solutions to create mutual benefit. This is why we have prioritized training, small business development, local hiring and local procurement as core areas of our social value. The next phase of the project opens opportunities for indigenous and local businesses, both small and large. Approximately 85% of the estimated total project spend will be in Canadian dollars, which means there will be hundreds of millions of dollars worth of local procurement opportunities over the coming years.
And we estimate this will contribute both direct and indirect economic spin off of approximately £1,800,000,000 GDP during construction. During the next phase of the project, construction expected to take six years, followed by a ramp up period of two years. In this time, we expect to create as many as 3,500 jobs at peak, Janssen Stage one construction, and approximately 600 jobs during mining production. We need to build a diverse and inclusive team, which is essential to building Johnson's workforce. We, like others, have found our most inclusive and diverse teams deliver safety benefits, have a better corporate culture and are more productive than other teams.
Therefore, we have a target of 20% indigenous employees targeted during operation, and we expect to achieve this target as we continue to create more opportunities for indigenous people. We are also committed to a gender balanced operation. And today, we have approximately 37% women in the potash business. Looking more locally, we have donated approximately 3,500 or sorry, dollars 35,000,000 to nearly to nearby local communities. As I previously mentioned, we have built relationships over the past decade.
And as part of this process, we have taken the time to learn from our First Nations communities on culture, history and their priorities. The result is we have established voluntary agreements with all six First Nations in the surrounding areas near Johnson. This approach agreements are unique for the potash industry in Saskatchewan. They are built on transparent and respectful relationships. They outline shared intent and objectives of the relationship and opportunities for Johnson.
They provide all parties with a governance structure, communication protocols, environmental sharing mechanisms, social value investments and other opportunities. One of the key features is these agreements are refreshed every five years to address any new issues, approaches or opportunities. And I'm happy to report we recently have refreshed our agreements over the past year, which are now in place for the next five years. Here at Johnson, we live these agreements commitments as part of our daily work across the whole organization and through our regular engagements. So I hope what I've covered on social value demonstrates how we are working with the local communities, First Nations and stakeholders to build mutually beneficial opportunities for all parties.
And with that, I would like to hand it over to Ray for closing remarks.
Thanks, Lindsay. Before I wrap up, I wanted to emphasize a point that you will have heard throughout the presentation today, namely that Jansen was designed with sustainability in mind. We've taken steps to ensure lower emissions and lower water usage from day one of our operation. But we're not standing still. As you heard from Giles earlier, we're already working on how to make Jansen even more sustainable.
So now I'd like to recap why Jansen is set up for success. Firstly, Janssen is an attractive future facing commodity with strong fundamentals. Secondly, Janssen is world class, high margin and a long life asset. Stage delivers both healthy returns and a platform for future growth opportunity. The embedded competitive advantages the team have talked about today are challenging for our competitors to replicate, meaning Janssen is well set up for decades to come.
Finally, we built the capabilities we need to unlock that value. We have an experienced and diverse team across mining, marketing and social value. We have a clear, well scoped plan for the work ahead and are ready to progress Stage one into production.