BHP cost blowouts at Canadian potash mine hit $6.7B

• BHP confirms total cost blowouts for its Jansen potash project expansions have reached $6.7 billion.
• The company will book a US$2.3 billion impairment charge in its upcoming annual financial results.
• The expansions are driven by the company's strategy to secure a 10% share of the global fertiliser market.

BHP (ASX:BHP) confirmed that total cost blowouts for the first two stages of its Jansen Potash Project in Canada have risen to US$4.7 billion, forcing the company to book a US$2.3 billion annual impairment.

The budget overruns include a US$2 billion increase for the stage two expansion alongside a prior 47% increase on stage one, which rose from US$5.7 billion to US$8.4 billion.

"Once Jansen stage 2 ramps up, we continue to expect that the combined Jansen mine will be the lowest unit cost Canadian potash mine at $US114-$US130 per tonne," BHP stated in an official release.

The mining firm attributed the stage two cost increases primarily to additional construction hours and an increased volume of materials required to complete the Saskatchewan expansion.

The company stated that the mine is scheduled to start production in 2027, with the asset expected to eventually produce 8.5 million tonnes of muriate of potash annually.

Following the announcement, the BHP share price was unchanged at $43.20.

The project aligns with the company's broader strategy to diversify its portfolio into agricultural fertilisers, alongside ongoing industrial challenges, including a potential strike involving nearly 300 iron ore workers at its Port Hedland export hub in Western Australia.