Jansen Stage 1 price tag swells as BHP completes cost reassessment
Diversified miner BHP has lifted the capital cost estimate for Stage 1 of its Jansen potash project in Canada to $8.4-billion, citing inflationary pressures, design development and scope changes, as well as lower-than-expected productivity outcomes during construction.
The miner reported on Tuesday that it had completed a detailed review of cost and schedule estimates for Jansen Stage 1, confirming that first production is expected in mid-calendar year 2027, reverting to the project’s original schedule.
The revised investment estimate compares with a previously announced range of $7-billion to $7.4-billion, released in July 2025, and the initial $5.7-billion estimate approved when the project was sanctioned in August 2021.
BHP noted in a project update issued alongside its interim operational results that the cost increases had already been flagged to the market last year and were largely driven by inflationary and real cost escalation pressures, design development and scope changes, and weaker productivity outcomes.
“The majority of the cost increase since the estimated range announced in July 2025 is from construction hours and quantities of materials that were not included in previous execution cost estimates,” the company said, adding that these costs were identified following a comprehensive review of the Jansen Stage 1 budget and schedule.
In response, BHP has implemented a plan aimed at addressing cost and schedule risks, including measures to improve productivity, strengthen project management and enhance oversight of execution contracts. The miner said the response plan was already delivering improved performance and was expected to support sustained efficiency gains at Jansen Stage 1, while also improving capital intensity for subsequent phases of the project.
Despite the higher capital cost, Jansen Stage 1 is now 75% complete and is still expected to deliver about 4.15-million tonnes a year of potash production. At consensus prices, the project has an updated internal rate of return of between 7.9% and 9.1%, with an expected payback period of 11 to 15 years from first production. Underlying earnings before interest, tax, depreciation and amortisation margins remain strong at about 63% to 64%, reflecting Jansen’s low-cost position.
BHP President Americas Brandon Craig said the group remained positive about the progress at Jansen and in potash as a future facing commodity.
BHP is also continuing to advance construction of Jansen Stage 2 and intends to apply the execution improvements identified during the Stage 1 review to the next phase. The company expects to update the market on the investment expenditure estimate for Stage 2 in the fourth quarter of its 2026 financial year.
Longer term, the Jansen project has the potential for two further expansions, lifting total production capacity to between 16-million and 17-million tonnes a year, subject to further studies and regulatory approvals.
