BHP shares lose more than $13b as cost blowouts to build Jansen potash mine rise to $6.7b

Shares in BHP have tumbled after revealing another multi-billion-dollar cost blowout to build its giant Jansen potash mine in Canada. By 11.40am BHP’s stock fell 4.2 per cent to $62.31, equivalent to $13.9 billion of market value, following an announcement that Jansen would cost an additional $US2.3b ($3.3b) more than expected. Australia’s most valuable company late on Thursday said Jansen’s phase two expansion will now cost $US6.9b, which adds to a ballooning $US8.4b bill for stage one of the mine. Stage one’s projected cost is now almost 50 per cent above the original budget. The blowouts for both stages have now hit a total of $6.7b, with first potash from the $22b mine still about a year away. BHP decided to push ahead with the Jansen expansion in 2023, years before the first phase of the mine was in production, as fertiliser 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. BHP finally approved construction of the Jansen mine in Saskatchewan in 2021 after years of debate over the huge price tag and relatively marginal returns. 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.