Jansen Project Update

Costs are up, timelines are delayed, and payback is years away—proceed with caution.

Risk flags

• ●Execution risk is high: With only 16% of the project complete and first production not expected until late FY2031, there is significant uncertainty around the company’s ability to deliver on time and on budget. Historical slippage (a two-year delay and 41% cost increase) suggests further setbacks are possible.
• ●Capital intensity is extreme: The revised investment estimate of US$6.9 billion for Stage 2, combined with ongoing group capex guidance of US$11B for FY2027, means BHP is committing substantial resources to a single, long-dated project. This concentration increases exposure to further overruns or market downturns.
• ●Financial deterioration is evident: The recognition of a US$2.3 billion impairment charge signals that prior investments are not expected to generate their original returns. This is a red flag for capital discipline and project economics.
• ●Forward-looking claims dominate: The majority of the positive statements—production volumes, market share, IRR, payback, and margins—are projections contingent on successful execution and future market conditions. There is little in the way of realised performance to support these claims.
• ●Disclosure gaps remain: While headline numbers are provided, there is no detailed breakdown of the sources of cost escalation (e.g., construction hours, material quantities, escalation rates), making it difficult for investors to assess whether the new estimate is robust or likely to be revised again.
• ●Long-dated payoff: With first production not expected until FY2031 and full ramp-up two years later, investors face a long wait before any returns are realised. This increases the risk that market conditions or company priorities could change before the project delivers value.
• ●No new risk mitigation: The announcement does not mention any new offtake agreements, fixed-price contracts, or other measures that would reduce the risk of further overruns or delays. The absence of such de-risking steps is notable given the project’s recent setbacks.
• ●Geographic and operational complexity: The project is located in North America but managed by a company headquartered in Australia and the United Kingdom, adding layers of complexity in oversight, regulation, and execution. This can increase the risk of miscommunication or misalignment between local operations and corporate management.

Bottom line

For investors, this announcement is a clear signal that the Jansen Stage 2 project is facing mounting challenges. The cost has ballooned by US$2 billion (to US$6.9B), and the timeline has slipped by two years, pushing first production out to late FY2031. The company is taking a US$2.3 billion impairment, which is a direct admission that earlier capital was not well spent. While BHP continues to project strong returns and market share, these are entirely dependent on successful execution over a very long horizon, with meaningful cash flow not expected for at least seven years. There are no new risk mitigants—such as binding offtake agreements or fixed-price contracts—disclosed in this update, and the lack of granular detail on cost drivers makes it hard to judge whether the new budget is realistic. Investors should monitor for further cost or schedule revisions, evidence of de-risking (such as major contracts or customer commitments), and progress against the stated milestones (especially physical completion, not just engineering). This is not a signal to buy or even to average down; at best, it is a warning to remain on the sidelines or to demand much more evidence before committing capital. The single most important takeaway is that the project’s risk profile has materially worsened, and all forward-looking claims should be treated with skepticism until the company demonstrates real, tangible progress.

Announcement summary

(LSE/AIM:DI) BHP Group Limited announced that the total investment estimate for Jansen Stage 2 will increase from US$4.9 billion to US$6.9 billion (including contingencies), with first production estimated in late FY2031. Jansen Stage 2 was approved in October 2023 with an investment cost estimate of US$4.9 billion, and in August 2025, BHP announced a two-year extension, shifting first production from FY2029 to FY2031. At the end of May 2026, Jansen Stage 2 is 16% complete, with engineering at 83% complete. BHP continues to expect Jansen Stage 2 to deliver approximately 4.36 million tonnes per annum (Mtpa) of production, and following a two-year ramp-up, combined output from Jansen is expected to be 8.5Mtpa, delivering approximately 10% of total global potash production. The updated internal rate of return for Jansen Stage 2 is 11%, with an expected payback period of 8 years and underlying EBITDA margins above 65%. BHP expects its Group capital expenditure guidance for FY2027 to remain at approximately US$11B. The company currently expects to recognise an impairment charge of approximately US$2.3 billion (before and after tax) in relation to its investment to date in the Jansen project.

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