BHP flags $2 billion cost overrun at Jansen development in Saskatchewan

BHP's Jansen potash project in Saskatchewan. (Source: bhp.com)

The world’s largest mining company is flagging cost overruns at its Saskatchewan potash mine development.

BHP warned in an update Thursday morning that its Jansen project, located around 155 kilometres southeast of Saskatoon, is facing cost overruns of over $2 billion, with total investment in Stage 2 of the greenfield mine development rising to $6.9 billion.

The first phase of the Jansen project, Stage 1, is expected to start production by mid-2027. BHP estimates it will produce roughly 4.2 million tonnes of potash per year. Stage 2, which was delayed last year from a 2029 to 2031 opening date, is expected to increase production at the mine to about 8.5 million tonnes annually.

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Since announcing the delay, BHP conducted an extensive review of the Stage 2 project. It says the majority of the cost increase is from additional construction hours and the quantities of materials needed to complete it.

“During the review, key underground construction activities and engineering continued to progress,” BHP said in its update.

“At the end of May 2026, Jansen Stage 2 is 16 per cent complete with engineering at 83 per cent complete, de-risking the estimate for remaining work.”

The mining giant says once complete, the two phases of the mine will deliver about 10 per cent of the world’s potash production. Based on its price estimates and expected output, BHP believes Jansen Stage 2 will have a rate of return of around 11 per cent, and a payback period of eight years.

“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 US$114-130/t3 in line with unit cost estimates at sanction, reinforcing Jansen’s durable competitive advantage in the potash market and further supporting BHP’s long-term growth strategy in future facing commodities.”

BHP says Stage 1 is on track to achieve all its critical milestones and will likely be ready for production in mid 2027.

In preparation, BHP struck an agreement with both major railways earlier this month to get its potash to terminals for export, with connecting lines running to both rail networks.