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BHP Group will take a US$2.3 billion writedown on its giant Jansen potash mine, after announcing the latest in a series of cost and time overruns for an expansion of the project in Canada.
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BHP, the world’s largest miner, has routinely blown past cost estimates for the controversial project. Following a review, the company said Thursday the phase two expansion will now cost US$6.9 billion, up from an earlier forecast of US$4.9 billion. It will start producing toward the end of 2031.
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BHP decided to push ahead with the Jansen expansion in 2023, years before before the first phase of the mine was in production, as fertilizer prices surged after Russia’s invasion of Ukraine. Since then, prices have fallen and the costs of both phases have spiralled at a project that’s long been unpopular with some investors.
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BHP finally approved construction of the Jansen mine in Saskatchewan in 2021 after years of debate over the huge price tag. The mine, which could operate for a century, is seen by BHP as a business that could grow to a scale that would rival its flagship iron ore mines in Australia.
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First production from phase one of Jansen is expected next year.
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