BHP’s $2 billion jump in costs unsurprising, business commentator says

Ten months after announcing production delays for phase two of the Jansen potash project, BHP shared its cost estimates have also fallen short — by billions.

This week, the mining company put out a release sharing cost estimates for Jansen Stage 2 have shot up from US$4.9 billion to US$6.9 billion, citing extra construction hours and materials as the reason behind the price jump.

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According to BHP, by the end of May the second phase was 16 per cent finished.

For Rawlco Radio business commentator, Paul Martin, this two-billion dollar difference “is not a surprise.”

That’s because in August 2025, BHP shifted Jansen Stage 2’s first production back to 2031. It was a two-year delay from the original 2029 goal.

So, “this is just really the accounting for that decision,” he said, adding how when big, publicly traded companies like BHP make announcements it takes months before financial statements come out.

It’s not the first time the company’s cost estimates have fallen short for the potash project.

Earlier this year, BHP announced the first stage of the project would cost US$8.4 billion. When it was approved in 2021, that figure was estimated at US$5.7 billion.

According to Martin, though, in planning for a project of this magnitude, which takes years to complete, it’s hard to estimate precisely what inflation or the cost of materials will be five years down the road.

Plus, “you take a project of this magnitude where you essentially drill a hole in the ground that goes a mile or more deep, you never know what you’re going to encounter down there,” he said.

He compared it to trying to budget for home renovations.

“You put a price on a house and you say ‘yes, I’ll buy it,’ then the builders start to build it, you know. It may cost more or less to get it done at the other end, and the market may change in between,” Martin said.

But, he said, clearly the difference in costs isn’t enough to deter BHP from continuing with the project.

He said when the company first came into Saskatchewan, it wasn’t mining potash but made a strategic decision to diversify its production.

Initially, Martin said BHP attempted to purchase Potash Corp., but “that was ultimately rejected” by the federal government for going against the best interests of Canada.

The purchase would have allowed BHP to become a potash producer the next day, but since that didn’t work, Martin said the company is now stuck taking the riskier route.

“If you can’t buy it, then you have to build it, and that’s what they’re doing, and we’re seeing them do right now,” he said. BHP, “is trying to establish themselves as one of the major players in the industry.”

Delays and blown up cost estimates aside, according to Martin, once the Jansen project is finished it will solidify Saskatchewan’s position as one of the major potash suppliers globally.

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