BHP delays Jansen potash mine, blows budget by 30%

BHP (ASX, LON, NYSE: BHP) revealed on Friday that the first stage of its Jansen potash mine in the Western Canadian province of Saskatchewan will cost up to 30% more and come online a year later than originally planned.The world’s largest listed miner now expects to spend between $7 billion and $7.4 billion on the first phase, up from the original $5.7 billion estimate. First production has been pushed to 2027, a full year behind schedule.BHP cited “design and scope changes”, along with inflationary pressures and lower productivity, as the main reasons for the cost and schedule overruns.The miner also revealed that the second stage of the Jansen project will now begin production in 2031, two years later than previously planned. BMO analyst Alexander Pearce said the delay of this key expansion, intended to double production capacity and boost returns, was “likely good for potash prices”. He warned that it also may add pressure on total project capital expenditure. BHP has paused the planned $4.9 billion investment in the second stage and withdrawn its cost estimate, pending further study.The delay stems from what BHP described as the “potential for additional potash supply” coming to the market in the medium term, as well as a regular review of capital project sequencing under its investment framework.Potash, used in fertilizer and crop nutrients, is central to BHP’s long-term diversification strategy. The company expects global demand to rise alongside population growth and pressure to improve farming yields given limited land supply. A decade in the makingBHP’s push into the potash market began in 2006 under then-chief executive Chip Goodyear, who secured the company’s first tenements in Saskatchewan. Successive CEOs kept the momentum. In 2010, Marius Kloppers launched a failed $38.6 billion bid for the company now known as Nutrien. Andrew Mackenzie later committed $2.6 billion to early development work at Jansen. In 2021, with current CEO Mike Henry in charge, BHP signed off on the $5.7 billion investment needed to build the potash mine.The blowouts at Jansen are significant by industry standards and mirror recent challenges at other large-scale projects. Rio Tinto’s underground expansion of the Oyu Tolgoi copper mine in Mongolia, ran nearly $1.8 billion over budget.BHP itself has faced similar issues outside its core Australian iron ore business, such as the $670 million overrun during its $2.5 billion upgrade of the Spence copper mine in Chile.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.comWeiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com