BHP Flags $2.3 Billion Potash Write-Down as Costs Rise — Update

By Rhiannon Hoyle

BHP Group said it expects to write down the value of its giant potash project in Canada by roughly $2.3 billion, as it announced another cost overrun on a mine that is set to become one of the biggest sources of the fertilizer ingredient globally.

The company said Thursday that it now expects an expansion of the Jansen project in Canada's Saskatchewan province to cost $6.9 billion, up from an estimate of $4.9 billion when it approved the second-stage development in 2023.

It is the latest setback for a project that has faced a series of overruns on its first stage, scheduled to produce its first potash mid next year. BHP in January said it expects the initial phase of the development to cost $8.4 billion, up from an estimate of between $7.0 billion and $7.4 billion in July last year and a $5.7 billion forecast when the project was approved in 2021.

The expected $2.3 billion impairment charge reflects the higher forecast capital intensity of the entire project, it said Thursday.

The world's No. 1 miner by market value, BHP has been reshaping its business to bet on a continued shift to lower-carbon energy sources and global population growth via investments in copper and potash--reducing its reliance on steel ingredient iron ore, long its major profit engine.

BHP says potash, which tends to boost crop yields, will be essential for food security and more sustainable farming in future. It expects Jansen to account for about 10% of global potash output once the first two stages are running at full capacity.

First production from the expansion project is expected in 2031, and output will likely take about two years to ramp up, it said. Combined output from the two stages is estimated at 8.5 million metric tons annually.

Most of the cost increase for the expansion is from additional construction hours and materials, BHP said.

Even before Thursday's overrun, analysts had expressed disappointment about cost increases and delays to the project. Jansen is the only major development BHP currently has under construction.

"The delayed and more expensive build has been frustrating for shareholders" and "at odds with BHP's strong track record of development," UBS said in a note to clients earlier this month. At the time, it said it still viewed Jansen as an attractive project.

The latest overrun comes just two weeks before Brandon Craig is due to succeed Mike Henry as chief executive of the company. Craig, a veteran BHP executive, has run the miner's Americas operations since March 2024.

Craig said Jansen remains "an important pillar" of BHP's strategy and, once operational, will establish the company as "a leading player" in the global potash industry.

"The combined Jansen Stage 1 and 2 will be a low-cost, long-life asset with [an] almost 60-year mine life and is expected to generate benefits for shareholders for decades," Craig said.

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

(END) Dow Jones Newswires

June 18, 2026 06:30 ET (10:30 GMT)