BHP has announced a significant increase in the investment estimate for Stage 1 of its Jansen potash project, raising it to $8.4 billion, including contingencies. This marks a substantial jump from the initial estimate of $5.7 billion when the project was approved in August 2021, and also higher than the revised range of $7.0 billion to $7.4 billion announced in July 2025. The company also confirmed that the first production schedule has reverted to the original target of mid-2027, after previously being slated for mid-2026.
The cost increases are primarily attributed to inflationary and real cost escalation pressures, design development, scope changes, and lower productivity outcomes. A comprehensive review identified that a majority of the recent cost increase since July 2025 stems from construction hours and quantities of materials that were not included in previous execution cost estimates. Despite these cost overruns, BHP states that the project remains 75% complete and is expected to deliver approximately 4.15 million tonnes per annum (Mtpa) of production.
BHP has implemented a response plan to mitigate further risks, focusing on improving productivity, strengthening project management, and enhancing oversight of execution contracts. While the updated internal rate of return for Jansen Stage 1 is between 7.9% and 9.1%, with an expected payback period of 11 to 15 years from first production, the underlying EBITDA margins are projected to remain strong at approximately 63% to 64% due to the project's low-cost position. BHP is also advancing construction for Jansen Stage 2 and plans to update the investment expenditure estimate for it in Q4 FY2026, with the entire Jansen project having a long-term potential for an ultimate production capacity of 16 to 17 Mtpa through additional expansions.
