BHP has increased the capital estimate for the second phase of its Jansen potash project in Saskatchewan, while extending the development timeline and preparing to record a significant impairment on the asset as part of its fiscal 2026 reporting.
The revised plan raises the total investment required for Jansen Stage 2 to US$6.9 billion, compared with the US$4.9 billion approved in October 2023. The company now expects first production from the expansion phase in late FY2031, following an earlier schedule revision that had already pushed start-up from FY2029 to FY2031. As part of its FY2026 financial reporting process, BHP said it currently expects to recognize an impairment charge of approximately US$2.3 billion across the broader Jansen asset portfolio.
Stage 1 Construction Progress Continues
Despite the revised capital requirements and schedule adjustments for Stage 2, development of the overall project remains underway. Jansen Stage 1 is still scheduled to deliver first production in mid-calendar 2027. BHP reported that Stage 2 construction was 16% complete at the end of May 2026, while engineering activities had reached 83% completion.
The company continues to forecast annual production of approximately 4.36 million tonnes of potash from Stage 2. Once both stages are fully commissioned and operating at capacity, the combined Jansen development is expected to produce 8.5 million tonnes per year of potash. At that level, the Saskatchewan operation would account for roughly 10% of global potash production.
Long-Life Fertilizer Asset Remains Central to Growth Strategy
The Jansen project represents BHP’s effort to establish a significant long-term position in the fertilizer sector alongside its existing exposure to iron ore, copper and metallurgical coal. Potash demand is closely linked to agricultural productivity and food security, providing the company with exposure to a market segment that differs from commodities primarily tied to construction and steelmaking activity.
The project has been designed as a large-scale, expandable operation in a stable mining jurisdiction, with an anticipated operating life measured in decades.
Project Economics Under Greater Scrutiny
The increase in development costs has intensified investor focus on the project’s financial returns. Using consensus commodity price assumptions, BHP estimates that Jansen Stage 2 will generate an 11% internal rate of return and achieve capital payback over approximately eight years. While those metrics are associated with an asset expected to operate for nearly 60 years, the revised economics leave less flexibility for additional cost increases or schedule delays.
Cost Inflation Impacts Major Resource Developments
BHP attributed the revised investment estimate to higher construction labour requirements, increased material quantities and findings from the company’s cost and schedule review process. The factors affecting Jansen reflect broader trends across the mining sector, where major developments in potash, copper, lithium, nickel and fertilizer-related commodities have encountered escalating construction costs and schedule pressures. At the same time, governments and downstream industries continue to seek secure supplies of strategically important raw materials, increasing pressure on developers to bring new production online.
Execution Becomes the Key Focus
The latest revision shifts attention toward project delivery and cost control as Jansen advances through construction. BHP now faces the task of demonstrating that the updated capital estimate and schedule represent a stable development framework for Stage 2.
The Jansen project remains one of the largest potash developments under construction globally and is expected to become a major source of long-term fertilizer supply. However, investor attention has increasingly turned to execution performance, capital discipline and the project’s ability to deliver the returns associated with its revised investment profile.
