BHP has increased the expected cost of its Jansen potash project in Saskatchewan, Canada, to US$6.9 billion, as a review of Stage 2 identified higher construction requirements, increased material quantities and cost escalation.
The revised investment estimate represents a significant increase from the previous US$4.9 billion forecast, including contingencies. BHP said first production from Jansen Stage 2 is now expected in late financial year 2031. The project has become a key test of BHP’s strategy to expand beyond its traditional commodities portfolio of iron ore, copper and metallurgical coal into long-life resources linked to future demand trends.
Stage 2 development faces higher construction costs
BHP completed a detailed review of Jansen Stage 2 and attributed the higher capital requirement to additional construction hours, greater material volumes and escalation pressures identified during the assessment. At the end of May 2026, construction progress for Stage 2 had reached 16% completion, while engineering activities were 83% complete.
The higher investment requirement has led BHP to reassess the carrying value of the project. The company expects to record an impairment charge of approximately US$2.3 billion before and after tax related to its investment in Jansen. Despite the impairment, BHP said its FY2027 group capital expenditure guidance remains around US$11 billion.
Jansen production outlook remains unchanged
BHP continues to maintain the strategic rationale for the Saskatchewan potash development. The company expects Jansen Stage 2 to produce approximately 4.36 million tonnes of potash per year once operational.
Following a two-year ramp-up period after first production, combined production from the Jansen operation is expected to reach 8.5 million tonnes annually, representing approximately 10% of global potash production. BHP said the updated internal rate of return for Stage 2 is 11% at consensus prices, with an expected eight-year payback period. The company also expects the combined Jansen operation to remain the lowest unit-cost Canadian potash operation.
Stage 1 provides earlier operational milestone
The first phase of the project remains on schedule, with Jansen Stage 1 expected to begin production in mid-calendar 2027. The earlier production start is expected to provide an initial operational milestone for BHP’s entry into the potash market, while Stage 2 represents the larger expansion component of the development.
The increased Stage 2 capital requirement is expected to place additional focus on construction performance, project execution and future capital management.
Potash expansion strategy faces investor scrutiny
Potash remains part of BHP’s broader future-facing commodities strategy, reflecting its links to agriculture, food security and long-life resource assets. The higher project cost has increased attention on whether the company can achieve diversification into new commodities while maintaining capital returns expected by investors.
The revised investment profile means future updates on construction productivity, capital discipline and potash market assumptions will remain closely monitored. Jansen remains a major planned potash development for BHP, but the latest review shows the project will require substantially higher capital investment than previously expected.
