A cornerstone project in BHP‘s strategy to diversify beyond iron ore and copper has encountered substantial obstacles, with the Australian miner’s Jansen potash development now facing a budget increase of nearly $2 billion and significant production delays.
The mining giant disclosed Friday that capital requirements for the project’s opening phase have ballooned to as much as $7.4 billion from an initial estimate of $5.7 billion. Production startup, originally targeted for next year, has been postponed until 2027.
The escalating costs stem from engineering modifications, workforce productivity issues, and broader inflationary pressures affecting major construction projects across Canada’s resource sector.
For BHP, the setbacks represent a critical test of its pivot toward agricultural commodities as traditional mining markets face uncertainty. The company has committed more than $10 billion to the Saskatchewan venture, with executives describing potash as a “future-facing commodity” supporting long-term demand growth.
Construction progress shows the development has reached approximately two-thirds completion despite the mounting challenges. BHP maintains that long-term project economics remain attractive, projecting investment returns between 12% and 14%.
The delays carry implications beyond BHP’s balance sheet, with the project originally expected to create approximately 550 permanent positions in the Humboldt area during operations.
Market analysts view the production postponement as potentially supportive for potash pricing, as global supply additions will arrive later than anticipated. BMO analyst Alexander Pearce described the delay as likely beneficial for potash prices while cautioning it may increase pressure on BHP’s total capital expenditure.
The facility sits roughly 140 kilometers from Saskatoon and constitutes Saskatchewan’s most substantial private sector investment to date. Upon reaching full capacity, the operation will rank among the globe’s major potash producers, with annual output projected at 8.5 million tonnes — representing approximately one-tenth of worldwide production.
BHP has also deferred its second development phase, originally scheduled for 2029, until 2031. The company suspended a separate $4.9 billion investment pending market analysis amid concerns about competing supply projects.
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