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A farmer works a potato field in Prince Edward Island on July 13, 2000.ANDREW VAUGHAN/The Canadian Press

Nutrien Ltd . and rival BHP Group Ltd. are negotiating a $5-billion-plus joint venture on BHP’s Jansen potash mine in Saskatchewan, a high stakes deal that has already contributed to the abrupt departure last month of Nutrien’s long-time chief executive, Chuck Magro.

Nutrien, one of the world’s largest fertilizer producers, has been in talks with BHP for more than a year over combining forces on the Jansen project, and these negotiations are continuing despite recent executives changes at the Saskatoon-based company, according to two sources working with the mining companies. A third source said the two companies called the joint venture “Project Wolverine.” The Globe and Mail agreed not to name these sources because they are not authorized to speak about confidential discussions.

The joint venture, which would see Nutrien taking control of operation of the Jansen mine after construction is completed, was part of a larger transformation Mr. Magro presented to Nutrien’s board of directors last month. According to sources, the CEO also proposed creating a market-leading pure-play fertilizer company by potentially spinning out or selling Nutrien’s retail division, which operates 2,000 farm supply stores in North America, Brazil and Australia.

Nutrien CEO Chuck Magro stepping down as head of Saskatoon-based fertilizer giant

A number of board members disagreed with this plan, arguing the stores ring up dependable sales, balancing Nutrien’s more cyclical fertilizer production business, according to the sources. On a Sunday in mid-April, which sources said was two days before a scheduled board vote on the strategy, Nutrien announced Mr. Magro had left the company, replaced as CEO by former chair Mayo Schmidt.

Mr. Schmidt continued talks with BHP, but ended any discussion of spinning out the retail division. Mr. Schmidt is former CEO of Viterra Inc., an agriculture company that had a retail division, and an ex-CEO of Hydro One Ltd.

Nutrien and BHP declined to comment on both the Jansen project and Mr. Magro’s departure, and Mr. Magro also declined to comment. He was named CEO of Agrium Inc. in 2014, and in 2018 the company merged with Potash Corp. of Saskatchewan to create Nutrien.

Nutrien and BHP’s continuing negotiations around the Jansen project venture come at a time when even the largest mining companies are concerned with the rising cost of major projects. Melbourne, Australia-based BHP has already invested more than $4-billion in Jansen, digging two 1,000-metre-deep shafts. The site holds an estimated 15 per cent of the world’s potash reserves. The company says it will cost at least an additional $5-billion to complete the project.

BHP executives have previously said the board will make a decision on moving forward by the end of June. BHP is primarily a base metal mine and a number of its shareholders, including activist Elliott Investment Management, have raised concerns with Jansen’s cost and the move into fertilizer.

“We’ve always said we’re open to partnering, but the project doesn’t need a partner to proceed,” Mike Henry, BHP’s chief executive, said at a conference this month.

“We think that the long-term demand and supply fundamentals for potash as a commodity are attractive,” he said. “We like the commodity. ... We don’t like the amount of capital that we’ve invested in the project today, without having a project end for production.”

BHP faces pressure from the Saskatchewan government to move forward on one of the biggest projects ever undertaken in the province, with thousands of jobs at stake.

“I have toured the Jansen mine, which was constructed on a remarkable scale and incorporates impressive technological innovations,” Bronwyn Eyre, the province’s Minister of Energy and Resources, said in an e-mail. “BHP has made a significant investment in this mine, and our government remains cautiously optimistic that it will move ahead with this important project.”

For Nutrien, owning a stake in Jansen would allow the company to dictate when its potash is mined and shipped to farmers, who use it to provide potassium for crops. In a conference call this month, Mr. Schmidt said the market could cope with Jansen coming on line, if the mine was developed in a disciplined manner.

“Ultimately, the goals of each side are straightforward,” analyst Ben Isaacson at Scotia Capital said in a report. “BHP would like to, but does not need to, find a partner to manage the risk and possibly appease some unhappy shareholders, including Elliott. Nutrien would like to, but does not need to, manage the Jansen [output].”

Potash prices are up by more than 25 per cent this year in major markets and are expected to keep rising, in part because of Belarus’s move last week to hijack an Irish passenger jet travelling through its airspace. The Eastern European nation is home to one of the world’s largest potash suppliers, state-owned Belaruskali.

“We expect to see economic sanctions placed on Belaruskali,” said Scotia’s Mr. Isaacson. “Any disruption to, or reshuffling of, trade-flow activity will almost certainly be a positive for global potash markets.”

Bloomberg first reported the companies were in talks this week, but the details and nature of the discussions have not been reported before.

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