BHP Upgrades Copper Output Guidance; Raises Cost of Potash Project Again — 2nd Update

By Rhiannon Hoyle

BHP Group upgraded its annual copper-production guidance amid record-high prices for the industrial metal, but announced another cost overrun on its giant potash project in Canada.

BHP, the world's biggest miner by market value, said Tuesday that it now expects to produce between 1.9 million and 2.0 million metric tons of copper in its fiscal year through June, compared to a prior estimate of between 1.8 million and 2.0 million tons.

Higher-than-anticipated output of the metal is underpinned by a strong performance at the massive Escondida mine in Chile and will help the miner further capitalize on record prices, said Chief Executive Mike Henry.

U.S. copper futures have surged to an all-time high as investors bet on a shortage of the metal, used widely in construction, electronics and auto manufacturing. According to BHP, "the strong copper price is being driven by healthy demand and by supply disruptions at a number of competitors."

BHP reported second-quarter copper output of 490,500 tons, down 1% on the quarter immediately prior and 4% on a year ago. First-half production was flat compared with the same period a year earlier. The company reported a 29% jump in the price it received for its copper compared with the previous quarter.

Australia-based BHP has been reshaping its business to bet on an accelerating energy transition and global population growth via investments in copper and potash, a fertilizer ingredient.

BHP last year unsuccessfully sought to buy rival Anglo American, arguing that a combination of the companies' prized copper mines and other operations would have significant benefits. BHP currently relies on steel ingredient iron ore for more than half its earnings.

The company last year flagged rising costs at the Jansen potash project in Canada's Saskatchewan province, its only major development currently under construction. Then, the miner said the first stage of the project could cost between $7.0 billion and $7.4 billion to build, up from $5.7 billion previously, but said its estimates were being reviewed.

On Tuesday, BHP said it now expects the first stage of Jansen will cost $8.4 billion, including contingencies. It cited "construction hours and quantities of materials that were not included in previous execution cost estimates" for the latest overrun.

The rising cost of the Jansen project offset what was a strong quarter operationally for BHP, RBC Capital Markets analyst Kaan Peker said in a note to clients. The latest cost estimate is roughly $1 billion higher than RBC's forecast, he said.

The head of BHP's Americas business, Brandon Craig, said the miner remains positive about progress on the Jansen project, where the first stage of development is 75% complete.

"Jansen is an important pillar in BHP's long-term growth strategy and is a long-life, low cost expandable asset that is expected to generate benefits for shareholders for decades," Craig said.

BHP continues to review its cost estimate for the second stage of the project, and said it expects to update investors in the fourth quarter of its fiscal year.

Shares in the company were 1.9% lower by early afternoon in Sydney. An index of Australian metals and mining stocks was down by 1.6%, as concerns about Trump's pursuit of Greenland and planned tariffs for several European countries weighed on global equities markets.

In its lucrative iron-ore business, BHP reported a rise in second-quarter production but cautioned that prices were under some pressure amid protracted contract talks with China's state-run iron-ore buyer.

BHP produced 69.7 million tons of iron ore during the quarter, up 9% on the quarter immediately prior and 5% higher than the same period a year earlier. Operations benefited from recent infrastructure improvements, and first-half production and shipments were at a record high, BHP said.

The miner said it continues to negotiate annual contract terms with the China Mineral Resources Group--talks that are being closely watched in the industry for signs of China getting greater power over prices of the steelmaking commodity.

BHP reiterated that it will continue to seek the best avenues for sales of its ore during negotiations and make changes where required within its operations to ensure it remains flexible and productive.

"This has seen some impact to realized price," BHP said. Still, BHP said the price it received for its iron ore during the second quarter was 2% higher than the quarter immediately prior and 4% higher than a year earlier.

On the whole, China's commodity demand has been resilient, supported by policy measures and solid exports, said Henry, BHP's CEO. "Forecast global growth in 2026 is around 3%, creating a positive backdrop for commodity demand," he said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

January 19, 2026 22:20 ET (03:20 GMT)