BHP's Jansen Phase 2 Potash Project Faces $2 Billion Cost Overrun, Triggering ~$2.3 Billion Impairment Charge
Claire Weston
BHP's Jansen potash Stage 2 budget has jumped from US$4.9 billion to US$6.9 billion, triggering an approximately US$2.3 billion impairment charge. This is the project's second major cost blowout, putting its economic case under fresh market scrutiny.
How much more is Stage 2 costing?
The Stage 2 budget rose from the US$4.9 billion approved in 2023 to US$6.9 billion — an extra US$2 billion.
The overrun stems from higher construction hours and greater material consumption — not a design change, just more labour and more inputs than planned.
BHP is booking roughly US$2.3 billion in asset impairments. This means → the company itself acknowledges the asset is no longer worth what the books say at the new cost base.
Stage 1 already blew out — why is Stage 2 repeating the pattern?
Stage 1 costs climbed from US$5.7 billion at 2021 approval to US$8.4 billion — passing through an interim estimate of US$7.0–7.4 billion along the way.
After finishing its Stage 1 cost review, BHP immediately re-examined Stage 2 and found the same shortfall. In plain terms = the disease in Stage 1 was present in Stage 2 all along; it was just diagnosed one step later.
Stage 1 is expected to start production next year; Stage 2 targets first output by end of FY2031.
What do both stages together tell us?
Stage 1 at US$8.4 billion plus Stage 2 at US$6.9 billion puts Jansen's total capital commitment at US$15.3 billion — far above the original plan.
This reflects a chronic risk in mega-scale mining: underground construction uncertainty is nearly impossible to price fully at the approval stage.
The market's next checkpoint is Stage 1's actual operating data after start-up — only real output and cost numbers can rebuild confidence in the project's economics.
Content is for reference only, not financial advice.