BHP has flagged a capital cost overrun at Stage 2 of its flagship Jansen potash project in Canada, forcing the company to forecast a US$2.3 billion asset impairment charge on its books.
Following a detailed cost and schedule review, the Australian mining giant confirmed that the total investment estimate for Jansen Stage 2 has jumped by over 40 per cent, increasing from US$4.9 billion to US$6.9 billion.
BHP attributed the multi-billion-dollar cost primarily to an increase in required construction hours, a higher volume of building materials, and severe inflationary cost escalation.
First production from Stage 2 remains set for late financial year 2031, aligning with the revised timeline announced during a two-year extension disclosure in August last year.
Despite the heavy capital injection, engineering on Stage 2 is tracking at 83 per cent complete, while overall construction progress sits at 16 per cent, which BHP states significantly de-risks the remaining body of work.
The broader financial hit comes via an anticipated pre- and post-tax impairment of approximately US$2.3 billion, which will be recognised on the group’s aggregate Jansen asset base as part of its upcoming 2026 financial results.
BHP expects its group capital expenditure guidance for fiscal 2027 to remain at approximately US$11 billion.
Despite the immediate balance sheet pain, BHP continues to back the long-term economics of the deposit, noting it is a vital pillar for portfolio diversification into future-facing commodities.
The combined output of Stage 1 and Stage 2 is expected to hit 8.5 million tonnes per annum, supplying roughly 10 per cent of the global market for the critical agricultural fertiliser.
Once fully operational, the asset boasts a formidable 60-year mine life and is projected to be the lowest unit-cost operation in Canada.
BHP President Americas and CEO-elect, Brandon Craig, said: “BHP continues to invest in its long-term growth strategy.
“The combined Jansen Stage 1 and 2 will be a low-cost, long-life asset with almost 60-year mine life and is expected to generate benefits for shareholders for decades.
“Once operational, Jansen will establish BHP as a leading player in the global potash industry.”
