BHP Group Ltd (ASX: BHP) shares are under pressure on Friday after the mining giant revealed another cost blowout at its Jansen potash project.
At the time of writing, the BHP share price is down 3.20% to $62.96.
The fall follows an update released after the market close on Thursday, with BHP revealing higher costs for Jansen Stage 2 in Canada.
Even with today's drop, the stock is still up around 38% since the start of 2026 and 74% higher than this time last year.
Here's what was in the update.
Image source: Getty Images
Jansen costs keep climbing
According to the announcement, BHP has completed a detailed review of the cost and schedule estimates for Jansen Stage 2.
The company now expects Stage 2 to cost between US$4.9 billion and US$5.4 billion. This compares with the US$4.9 billion estimate when the project was approved in October 2023.
However, the full investment estimate for Stage 2 has lifted to US$6.9 billion, up from US$4.9 billion. That means the project is now expected to cost around US$2 billion more than first planned.
First production from Stage 2 is also now expected in the 2031 financial year. BHP said the two-year extension will allow it to review the project delivery and cost schedule estimates and help guide a decision on when to spend further capital.
The company said construction work has continued, with underground construction and engineering progressing.
By the end of May, Jansen Stage 2 was 16% complete, while engineering was 83% complete.
Why BHP is spending so much on potash
Potash is used in fertiliser, and BHP sees it as a way to grow beyond its usual mining business.
Management expects Stage 2 is expected to produce about 4.36 million tonnes per year once it is running. Together with Stage 1, Jansen could become one of the world's largest potash mines.
But Stage 1 is still seen as a key milestone. BHP said first production remains on track for the 2027 financial year, although the revised cost estimate is now between US$4.9 billion and US$5.1 billion.
The problem is that Jansen is already a large and expensive project. And with costs rising, there are some questions around how much capital is needed before it starts producing significant cash flow.
BHP also plans to recognise an impairment charge of about US$2.3 billion against Jansen Stage 2 as part of its FY26 results.
What comes next?
BHP said it will provide another update on Stage 1 timing and spending before 31 December 2026.
Management still sees potash as an important long-term growth area. This is especially as global food demand rises and farmers look to improve crop yields.
Over the long term, the idea stacks up. But after the share price running hot in recent times, the market is watching how much BHP is spending to get there.
