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BHP is taking a $2.3bn writedown in the value of its key Canadian fertiliser project, saying that the cost of the troubled development’s second phase will be $2bn higher than its previous forecast.
The Australian company had put the second phase of its Jansen potash project under review last year after reporting a cost blowout during the initial phase of the development.
BHP, the world’s largest miner, previously expected to start producing fertiliser at Jansen, in the province of Saskatchewan, this year. In the 2025 review, it said both legs of the project, which is key to its expansion into commodities such as potash and copper, would be delayed to fiscal 2027 and 2031, respectively.
The writedown and higher cost guidance represent a blow to the company and will be the last significant act of Mike Henry’s tenure as chief executive before he hands over to Brandon Craig on July 1.
The development of potash, alongside copper, has been one of BHP’s key growth strategies under Henry, as the company sought to reduce exposure to its traditional strengths of coal and iron ore and move towards metals and minerals expected to play a leading role in the energy transition.
The strategy sits within Craig’s current responsibilities as head of the Americas unit. The incoming chief said in Thursday’s statement that BHP remained committed to potash as a growth driver.
“Jansen is an important pillar of BHP’s strategy and will deliver exposure to a future-facing commodity with strong demand fundamentals,” he said, adding that it “will establish BHP as a leading player in the global potash industry”.
But investors and rivals have expressed concerns about saturation in the fertiliser market since BHP began pursuing potash a decade ago, with activist investor Elliott saying in 2017 that it had “deep concerns” over the company’s move into the commodity.
BHP — which reports fourth-quarter production numbers next month and full-year results later in the year — said it expected capital expenditure to remain at about $11bn in fiscal 2027.
BHP has also pursued deals, including tilts at Anglo American, to boost its growth profile. It has bought several smaller rivals and projects alongside its investments in existing copper, iron ore and potash operations. It has also looked to capitalise on byproducts such as gold and silver.
Rival Rio Tinto has expanded into lithium and, under new chief Simon Trott, it has looked to shed smaller operations and sell stakes in infrastructure assets. It has also explored a combination with Glencore, which was abandoned earlier this year.
BHP’s London-listed shares fell 4.3 per cent by Thursday afternoon.
