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Update: BHP Group Lifts Canada Potash Project Cost to Nearly $7 Billion; Shares Fall 3%

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(Updates to add stock movement in the headline and the sixth paragraph)

BHP Group (ASX:BHP) increased the estimated investment for its Jansen stage two potash project to $6.9 billion from $4.9 billion after a detailed cost and schedule review, delaying first production by two years to late fiscal 2031, according to an Australian bourse filing on Thursday after market hours.

The increase is driven mainly by additional construction hours, increased material quantities, and cost escalation identified in the reassessment despite engineering being 83% complete and the project 16% constructed, per the filing.

The project is expected to produce around 4.4 million tonnes per annum (Mtpa) despite its higher capital intensity, contributing to a combined total of around 8.5 Mtpa for the full Jansen operation after ramp-up, the filing said.

The project is expected to generate an internal rate of return of 11%, an eight-year payback, and earnings before interest, taxes, depreciation, and amortization margins above 65%, with unit costs among the lowest in Canada at $114 to $130 per tonne.

The company expects a roughly $2.3 billion impairment on the Jansen asset base as of June, driven by higher capital intensity across both stages and potential expansions, while stage one remains on track for first production in mid-2027 and fiscal 2027 capital expenditure guidance remains around $11 billion, the filing added.

BHP's shares fell past 3% in early trading on Friday.

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