Business Context and Reporting Period
Company: BHP Group Ltd
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: 18 June 2026
Subject: Update on the Jansen Stage 2 Potash Project (Saskatchewan, Canada).
Context: BHP has completed a detailed review of cost and schedule estimates for Stage 2 of the Jansen potash project. The review confirms a significant increase in investment costs and a delay in the production timeline, necessitating an impairment charge on the aggregate Jansen asset base.
Key Financial Metrics and Project Economics
- Revised Investment Cost (Jansen Stage 2): US$6.9 billion (including contingencies), increased from the previously approved US$4.9 billion.
- Impairment Charge: Approximately US$2.3 billion (before and after tax) expected to be recognized in relation to the Jansen project investment to date due to higher forecast capital intensity.
- Group Capital Expenditure Guidance (FY2027): Remains at approximately US$11 billion.
- Production Capacity:
- Jansen Stage 2: ~4.36 million tonnes per annum (Mtpa).
- Combined Jansen (Stage 1 + 2): 8.5 Mtpa (approx. 10% of global potash production).
- Unit Cost (Combined Jansen): US$114–130 per tonne (lowest unit cost Canadian potash mine).
- Underlying EBITDA Margins (Jansen Stage 2): Above 65%.
- Internal Rate of Return (IRR): 11% (post-tax, nominal) at consensus prices.
- Payback Period: 8 years.
- Mine Life: Approximately 58 years.
Material Changes Versus Prior Period
- Cost Increase: Total investment for Stage 2 increased by US$2.0 billion (from US$4.9B to US$6.9B). Drivers include additional construction hours, increased material quantities, and cost escalation.
- Schedule Delay: First production for Stage 2 shifted from FY2029 to late FY2031 (a two-year extension).
- Project Status: As of May 2026, Jansen Stage 2 is 16% complete, with engineering at 83% complete.
- Stage 1 Status: Jansen Stage 1 remains on track for first production in mid-CY2027, achieving critical path milestones.
- Asset Valuation: Higher forecast capital intensity has reduced the value attributed to the Jansen Project by market participants, triggering the US$2.3 billion impairment.
Guidance, Outlook, and Management Commentary
Management Commentary: BHP President Americas and CEO-elect Brandon Craig stated that Jansen remains a pillar of BHP's long-term growth strategy, offering exposure to a future-facing commodity with strong demand fundamentals. Despite the reset, the combined mine is expected to be a low-cost, long-life asset generating shareholder benefits for decades.
Outlook and Risks:
- Impairment Confirmation: The US$2.3 billion impairment charge is subject to confirmation of the carrying value as at 30 June 2026.
- Market Position: Once operational, Jansen is expected to establish BHP as a leading player in the global potash industry.
- Cost Drivers: Ongoing pressures from inflation, design development, scope changes, and lower productivity outcomes were identified during the review.
- Resource Confidence: Mineral Resources and Ore Reserves remain robust, with 1,070 million tonnes of Probable Reserves declared.
Key Facts for Investor Verification
- Verify the final confirmation of the US$2.3 billion impairment charge in the upcoming FY2026 financial results.
- Monitor the revised capital expenditure trajectory for FY2027 to ensure it remains within the US$11 billion guidance despite the Stage 2 cost increase.
- Track the engineering completion rate (currently 83%) and construction progress (16%) to assess the feasibility of the new late FY2031 production target.
- Review the consensus potash price assumptions (average US$330/t FOB Vancouver) used to calculate the updated 11% IRR.
- Confirm that Jansen Stage 1 remains on schedule for mid-2027 production, which is critical for near-term cash flow generation.