Australian miner BHP Group has reported an increased capital estimate for its potash production expansion project Jansen Stage 2, in Saskatchewan, Canada, to $6.9-billion from $4.9-billion previously, as well as a $2.3-billion impairment charge as higher costs and additional labour hours drive up spending and ​delay first production.

BHP has exceed initial capital cost estimates at the two-stage Jansen project for the third time. ,

The company undertook a detailed cost and schedule review for Stage 2 of the Jansen project, with production now expected late in the 2031 financial year.

BHP continues to expect Jansen Stage 2 to deliver about 4.36-million tonnes a year of production.

Following an expected two-year ramp-up period from first production, combined output from Jansen is expected to be 8.5-million tonnes a year and will deliver about 10% of total global potash production.

Future expansions could eventually push the site to between 16-million and 17-million tonnes a year.

The funding covers the development of new mining districts, second shaft hoist infrastructure, expanded processing facilities and additional rail cars to handle higher volumes.

BHP says the increased funding estimate is owing to additional construction hours and quantities of materials to complete Jansen Stage 2 and escalation, which was identified as part of the comprehensive review.

At the end of May, Jansen Stage 2 was 16% complete, with engineering at 83% complete, de-risking the estimate for remaining work.

Jansen Stage 2 has an updated internal rate of return of 11% and expected payback period of eight years. Underlying earnings margins for Jansen Stage 2 remain above 65% owing to its low cost position.

Once Jansen Stage 2 ramps up, BHP anticipates that the combined Jansen mine will be the lowest unit cost Canadian potash mine at between $114/t and 130/t, in line with unit cost estimates at sanction, reinforcing Jansen’s durable competitive advantage in the potash market and further supporting BHP’s long-term growth strategy in future facing commodities.

Meanwhile, Jansen Stage 1 is achieving its critical path milestones set in the updated January 2026 cost and schedule estimate, and first production remains on track for mid-2027.

BHP expects its group capital expenditure guidance for the 2027 financial year to remain at about $11-billion.