Potash is one of three major ingredients in fertilizer. Proper fertilization leads to better crop yields. Maximizing yields from minimal arable land is one way to combat shortages of wheat, grains, and other agriculture products. In other words, potash is vital to food security, a complex issue at the intersection of many academic disciplines.

But, simply stated, man’s got to eat. And emerging market appetites are increasing by the day, adding pressure to a system already strained by developed-world demand and stressed by concurrent scarcity of energy, water and arable land. There’s opportunity for miners such as BHP Billiton Ltd (BHP), which is among a very few resource companies with the muscle to get a “greenfield” potash project past the dream stage.

And now it has the approval of the Saskatchewan Ministry of Environment to develop the Jansen potash project, located about 140 kilometers east of Saskatoon.

High-quality, economically mineable potash deposits are geographically concentrated and, as a result, it’s produced in only 12 countries. Canada, Russia, and Belarus, account for just over two-thirds of global capacity and, according to the US Geological Survey, almost 90 percent of estimated reserves. Saskatchewan has almost half of world reserves and 35 percent of global capacity.

Producers in the form of potassium also are seeking to avoid another spike in prices like the one three years ago, which spurred some farmers to shun the nutrient as crop prices fell.

Russia-based Uralkali OAO [London: URKA] plans to spend USD5.8 billion to raise annual production capacity by about 80 percent to 19 million metric tons by 2021. The Mosaic Company (NYSE: MOS) [TSX: POT], based in Minnesota, is bringing on about 200,000 tons of extra capacity at its Colonsay and Esterhazy mines in Saskatchewan, part of a plan to add 5 million tons of capacity by 2020. And Potash Corp of Saskatchewan (NYSE: POT)—which I first wrote about in this article—will phase in production from its expanded Cory mine in Saskatchewan in 2012. The company plans to raise capacity at existing mines to 17.1 million tons by 2015 from an estimated 11.3 million this year.

Prices tripled in 2008 as crop prices soared. The crop nutrient reached USD872.50 in February of that year, according to World Bank data, before tumbling 48 percent in 2009, the largest annual decline since at least 1961. Prices have risen 33 percent to USD470 a ton in 2011 but dropped 2.6 percent in September, the first monthly decline since October 2010.

Prices aren’t likely headed for a collapse similar to the one in 2009, and potash miners are expanding as the global population surpasses 7 billion and rising prosperity in developing nations puts pressure on food supplies.

Prices for soft commodities are high and apparently stable, as nobody seems to be considering postponement of deliveries of potash. Uralkali in August agreed to increase potash prices in India by 32 percent to USD490 a ton and is looking to sign a contract with China for 2012 for USD530 a ton. Potash Corp forecast Oct. 27, that global potash industry shipments will rise to a record 58 million to 60 million tons in 2012 from 57 million tons this year.

Major markets in Asia and Latin America have little or no domestic potash production capability and rely primarily on imports to meet their needs–a critical difference between the potash business and the other major crop nutrients. The large producing regions of Canada and the former Soviet Union have small domestic requirements and therefore are significant exporters.

Potash production is difficult to take up, however, and is incredibly risky because of the significant cost required to establish new sources of supply. One estimate puts the cost to develop a conventional 2 million metric ton greenfield mine and mill in Saskatchewan at more than USD4 billion.

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Shortly before it received approval from Saskatchewan to proceed, BHP announced it will invest an additional USD488 million to support development of the overall USD10 billion Jansen project during its feasibility study stage. The funding will go toward completion of mine design and engineering, initial surface construction, sinking of the first 350 meters of the production and service shafts and procurement of long-lead-time items.

Management expects final approval from the BHP board to come sometime in 2012.

Since initiating a feasibility study in February 2011 BHP has constructed the refrigeration center for the ground-freezing process required prior to the sinking production and service shafts and has drilled more than 55,000 meters of wells to complete the 89 freeze holes and monitoring wells.

Based on the current development schedule, Jansen is on track to start production in 2015. At full design capacity it’ll produce about 8 million metric tons per year of agricultural-grade potash from its 3.37 billion metric ton in-situ mineral resource. The estimated life of the mine is 70 years.

BHP’s investment in Jansen has surpassed USD1.2 billion, and it’s spent about USD2 billion exploring it and other potential projects in Saskatchewan in total. There’s no question now that–even after the Canadian federal government joined with Premier Brad Wall to derail BHP’s attempted acquisition of national champion Potash Corp of Saskatchewan in 2010–the company is committed to developing a world-class potash business in the province.