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BHP Group Ltd on Thursday flagged higher costs and an impairment charge related to its Jansen project, but maintained this will be ‘the lowest unit cost Canadian potash mine’ once fully operational. The Melbourne, Australia-based mining house raised its total investment estimate for Jansen stage 2 to $6.9 billion from $4.9 billion, which was the estimate under which the project was originally approved back in 2023. BHP last year pushed back the target date for first production from stage 2 to the financial year ending June 30, 2031 from financial 2029. This allowed the company to review the project in more detail ‘and to implement a response plan to address cost and schedule pressures,’ it said, citing ‘additional construction hours and quantities of materials’ for the cost increase. The operational expenditure estimate excludes carbon tax, royalties, and sustaining capital. The unit cost estimate is unchanged from previous guidance of $105 to $120 per tonne. At the end of May, Jansen stage 2 was about 16% complete, with engineering work 83% complete. BHP is targeting annual production of 4.4 million tonnes from Jansen stage 2, ramping up in the first two years to a combined annual output for the Jansen project of 8.5 million tonnes. By that estimate, BHP said the project will supply roughly 10% of the world’s potash, which is used in fertiliser. Based on consensus prices, which BHP cited as averaging $330 per tonne for financial 2031 to 2041, it expects Jansen stage 2’s internal rate of return to be 11%, over a payback period of eight years. The company continues to expect underlying earnings before interest, tax, depreciation and amortisation margins above 65%. Once Jansen stage 2 has ramped up, BHP sees the Jansen project as a whole being ‘the lowest unit cost Canadian potash mine’ at $114 to $130 per tonne. It added that stage 1 of the project and remains on track for first production in the middle of 2027, and left capital expenditure guidance for financial 2027 unchanged at $11 billion. However, BHP noted that it is reassessing Jansen’s carrying value based on the higher cost estimate, and therefore, expects to book a $2.3 billion impairment charge related to the asset. ‘Jansen is an important pillar of BHP’s strategy and will deliver exposure to a future facing commodity with strong demand fundamentals and portfolio diversification benefits,’ commented Brandon Craig, who is president of BHP Americas and taking over as group chief executive come July 1. ‘With the reset of Jansen stage 2, we are progressing with our intention of building a tier 1 asset. The combined Jansen stage 1 and 2 will be a low cost, long life asset with almost 60 year mine life and is expected to generate benefits for shareholders for decades. Once operational, Jansen will establish BHP as a leading player in the global potash industry.’ BHP shares closed 0.8% lower at A$65.04 on Thursday in Sydney. The stock was down 3.5% to 3,359.00 pence in London and traded 2.7% lower at R 729.33 in Johannesburg. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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