It blamed the cost increase at its Jansen potash mine on “inflationary and real cost escalation pressures, design development and scope changes, and our current assessment of lower productivity outcomes over the construction period.”Liam Richards/The Canadian Press
Australia’s BHP Group Ltd. said it expects a cost overrun of as much as 30 per cent at its Jansen potash mine in Saskatchewan along with a startup delay of at least six months.
In an operational update, BHP said the first phase of the project could cost US$7-billion to US$7.4-billion, up from its initial estimate of US$5.7-billion. It blamed the increase on “inflationary and real cost escalation pressures, design development and scope changes, and our current assessment of lower productivity outcomes over the construction period.”
Startup of the major fertilizer mine is now expected in mid-2027. It was previously scheduled for the end of 2026.
The company said the phase is 68-per-cent complete.
BHP’s overrun and delay at Jansen represents a setback for the company, but could be positive for global potash prices in 2026 and 2027 owing to tighter-than-expected supplies, Bank of Nova Scotia analyst Ben Isaacson said in a research note.
BHP also said it may delay the second phase of Jansen to 2031 from 2029, citing the potential for more potash supply coming onto the market in the medium term.
To date, the company has spent US$4.5-billion on the first phase and US$400-million on the second phase of the potash mine.