BHP’s Saskatchewan Potash Megaproject Hit by $2.3-Billion Writedown and Third Delay

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A project once presented as BHP’s carefully timed entry into the global fertilizer business has become one of the mining giant’s most expensive execution tests. BHP now expects to record a US$2.3-billion impairment on its Jansen potash development in Saskatchewan after lifting the estimated cost of Stage 2 to US$6.9 billion and pushing first production to late fiscal 2031. The update adds another setback to a project already carrying a sharply higher Stage 1 budget.

Yet Jansen is far from abandoned. Stage 1 remains scheduled to begin producing in mid-2027, while BHP continues to argue that the completed mine will be a low-cost, long-life operation capable of supplying about one-tenth of global potash production. That tension—between worsening construction economics and an unusually large strategic prize—now defines the project.

A US$2.3-Billion Reset, Not a Cancellation

The headline number is an expected US$2.3-billion impairment charge tied to BHP’s investment in Jansen to date. In practical terms, the company is acknowledging that higher future construction costs have reduced the value that a market participant would assign to the asset. BHP expects the charge to be approximately US$2.3 billion on both a pre-tax and after-tax basis as it completes its June 30, 2026, carrying-value assessment. It does not mean that amount is being paid out immediately, but it will reduce reported profit and the value of Jansen recorded on BHP’s balance sheet.

The trigger is Stage 2’s revised investment estimate, which has climbed from US$4.9 billion when approved in October 2023 to US$6.9 billion, including contingencies. That is an increase of roughly 41%. The expansion was 16% complete at the end of May 2026, although engineering was already 83% complete. BHP argues that the advanced engineering work reduces uncertainty around what remains. Investors may take a more cautious view: the project is still early enough in physical construction for productivity, labour availability and material quantities to remain important risks.

Three Major Misses Have Rewritten the Timeline

Jansen’s schedule has not moved in a straight line. When BHP approved Stage 1 in August 2021, first production was targeted for 2027. The company later accelerated that goal to late 2026 as fertilizer markets tightened following Russia’s invasion of Ukraine and concerns grew about global supply. In July 2025, however, BHP returned Stage 1 to its original mid-2027 timetable and raised the estimated cost to between US$7 billion and US$7.4 billion. A January 2026 review then lifted that budget again to US$8.4 billion.

Stage 2 followed a similar pattern. It was approved in 2023 with first production expected in fiscal 2029. BHP announced a two-year extension to fiscal 2031 in 2025, and the latest update now places production in late fiscal 2031. Reuters characterized the new disclosure as the third time BHP had exceeded cost-and-time estimates across Jansen’s two stages. The distinction matters: this is not three identical postponements of one opening date, but a succession of resets involving both phases. Each revision has made the original promise of a smoothly sequenced expansion harder to defend.

Labour, Materials and Design Changes Drove the Blowout

BHP’s explanation is unusually direct. The company attributes the latest increase mainly to additional construction hours, larger quantities of materials and cost escalation uncovered during a detailed review. Earlier disclosures also identified inflation, real cost increases, design development, scope changes and lower-than-planned productivity. These are familiar pressures on megaprojects, but the scale at Jansen is notable because Stage 2 was supposed to benefit from infrastructure, contractors and experience already established during Stage 1.

The numbers show how quickly those assumptions weakened. Stage 1 rose from an approved US$5.7 billion in 2021 to US$8.4 billion, an increase of almost 50%. Stage 2 has now risen by US$2 billion before reaching one-fifth completion. BHP says it has strengthened project management, improved oversight of execution contracts and introduced a response plan that has already lifted productivity. That may help prevent another reset, but credibility will depend on measurable construction progress. For workers and contractors at the site, the challenge is less abstract: every missed productivity assumption translates into more shifts, more material movements and a longer path before the mine produces saleable potash.

Stage 1 Is Now the Immediate Test

Despite the Stage 2 setback, BHP says Stage 1 remains on track for first production in mid-2027. That phase was 75% complete in January 2026, and the company said in June that it was meeting the critical-path milestones established after the January budget review. Stage 1 is expected to produce about 4.15 million tonnes of potash annually once ramped up. Its performance over the next year will therefore provide the clearest evidence of whether BHP’s corrective measures are working.

The economics have weakened but remain positive under BHP’s assumptions. At consensus potash prices, the company estimated Stage 1’s internal rate of return at 7.9% to 9.1%, with a payback period of 11 to 15 years after first production. Expected underlying EBITDA margins remain around 63% to 64%, reflecting Jansen’s projected low operating costs once running. Those figures illustrate why completion matters so much. A delayed mine generates no operating cash flow while construction spending continues. A functioning Stage 1, by contrast, would begin testing the ore body, processing facilities, rail system and port logistics under real commercial conditions before Stage 2 becomes the dominant capital challenge.

BHP Still Sees a Once-in-a-Generation Potash Asset

BHP’s willingness to absorb the writedown reflects the scale of the prize it still sees underground. Stage 2 is designed to add approximately 4.36 million tonnes of annual capacity, bringing combined Jansen output to about 8.5 million tonnes after a two-year ramp-up. BHP estimates that this would represent roughly 10% of total global potash production. The company also describes the combined operation as having an almost 60-year mine life, with possible later expansions that could eventually lift capacity to between 16 million and 17 million tonnes a year, subject to further studies and approvals.

Even after the cost increase, BHP forecasts an 11% post-tax nominal internal rate of return for Stage 2, an eight-year payback period and underlying EBITDA margins above 65%. It expects the completed Jansen operation to be the lowest-unit-cost Canadian potash mine, at an estimated US$114 to US$130 per tonne in 2026 dollars, excluding items such as royalties and sustaining capital. Those projections are not guarantees, especially over several decades. They do explain why BHP is continuing: few undeveloped mining assets offer comparable scale, longevity and the ability to transform a company into a major global supplier of an entirely new commodity.

Saskatchewan Has Jobs, Contracts and Reputation at Stake

For Saskatchewan, Jansen is more than a line in BHP’s capital budget. The mine, about 140 kilometres east of Saskatoon, has been promoted as the largest private investment in the province’s history. BHP estimates that the project will support roughly 5,500 workforce opportunities during construction and about 900 full-time roles when fully operational. The company also says Jansen will create approximately C$1 billion in contract opportunities for local and Indigenous businesses. Those figures help explain why each schedule change is watched closely beyond financial markets.

A delay does not automatically erase construction employment; in some cases, a longer build can extend work for certain trades. It can, however, postpone the stable operating jobs, supplier demand and production-linked tax and royalty flows expected once the mine is running. Communities in the Jansen region have also been planning around population growth, housing, infrastructure and training needs. BHP has set a goal of 20% Indigenous employee representation and has emphasized local procurement as part of the project’s social value. Delivering those commitments will matter almost as much locally as meeting the revised budget, particularly after years of presenting Jansen as a model of long-term partnership.

Jansen Will Enter an Already Powerful Canadian Industry

Jansen is being built in the centre of the world’s leading potash region. Natural Resources Canada reported that all 10 of Canada’s active potash mines were in Saskatchewan and that they produced an estimated 25 million tonnes of muriate of potash in 2024. The federal department also reported that Canadian potash exports rose 13% to C$9 billion in 2025. Saskatchewan says the province accounts for approximately one-third of global production and holds about 45% of known global reserves, giving it an influence in fertilizer markets that few jurisdictions possess.

That strength is both an advantage and a complication for BHP. Jansen benefits from established mining expertise, rail links and export infrastructure, including planned shipments through Westshore Terminals in British Columbia. At the same time, it will compete with experienced producers and arrive in a market where new supply can pressure prices. BHP cited the possibility of additional medium-term potash supply when it considered extending Stage 2 in 2025. The company’s long-term thesis rests on population growth, changing diets and the need to raise crop yields from limited arable land. Its near-term returns, however, will still depend on the commodity cycle when millions of new tonnes reach customers.

The Next Two Years Will Decide Whether Confidence Returns

The project’s next major milestone is no longer another presentation about long-term demand. It is Stage 1 production in mid-2027. Reaching that date without another material budget increase would give BHP evidence that its strengthened controls, contractor oversight and productivity measures are working. Missing it would deepen concerns that the Stage 2 estimate could also move again despite engineering being substantially advanced. BHP has kept group capital-expenditure guidance for fiscal 2027 at about US$11 billion, suggesting the latest reset will be managed within its broader spending plans rather than through an immediate increase in company-wide guidance.

The leadership transition adds to the scrutiny. Brandon Craig, BHP’s president of the Americas and the executive closely associated with Jansen, is scheduled to replace Mike Henry as chief executive on July 1, 2026. He will inherit both the project’s strategic promise and its damaged execution record. Taken together, BHP’s disclosed pre-Stage 1 investment and the revised Stage 1 and Stage 2 budgets total nearly US$19.8 billion through the second phase. At that scale, Jansen can still become a defining asset for BHP and Saskatchewan—but only if the latest numbers finally hold.

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