BHP’s potash blowout overshadows Australia iron ore record

BHP Group, the world’s largest miner, has again blown past cost estimates for its key Jansen potash project in Canada, raising projected investment in the first phase to $8.4 billion — $1 billion above the upper range of an already revised budget announced last year.

Cost and schedule overruns on large projects are not unusual in the sector, but potash — a key plank of BHP’s strategy as all miners scramble for growth — was approved in August 2021 at $5.7 billion. First production is now expected in the middle of 2027, though a second stage of development is still under review.

Production numbers released on Tuesday for the miner’s current core mines were broadly in line with analyst estimates, including record first-half output at its Australian iron ore operations. It produced 69.7 million tons of iron ore overall in its second quarter, up 5% on the same period a year ago, and reaffirmed its annual production guidance.

Realized prices for iron ore edged higher to $84.71 per ton. BHP has been locked in a dispute with China, the top consumer of its steelmaking ingredient, for months. State-owned trader China Mineral Resources Group Co. has sought to curb steel mills’ purchases from BHP, as part of a broader effort to increase the country’s negotiating clout and constrain miners’ pricing power.

The Melbourne-based miner said in its statement that it had responded by being more flexible with shipments, but added it had “seen some impact” to its selling price for iron ore. Other major foreign producers, including Brazil’s Vale SA, Rio Tinto Group, and Fortescue Ltd. will also need to negotiate with CMRG.

“China’s commodity demand remains resilient, supported by targeted policy measures and solid exports,” BHP chief executive officer Mike Henry said, adding momentum moderated in the second half of 2025, “notably in construction, manufacturing and infrastructure investments.”

Iron ore futures have managed to hold their ground in the last calendar year, gaining about 4% in 2025, but new supply could pressure prices lower over the coming quarters.

Production of copper dipped 4% in the three months to the end of December, to 490,500 tons. Realized prices jumped, however, as benchmark levels continue to track higher, breaking through $13,000 a ton.

BHP’s appetite to add to that number prompted it to make takeover approaches for rival Anglo American Plc., all rebuffed. The target has since agreed to tie up with fellow copper heavyweight Teck Resources Ltd. Rival Rio Tinto Group, meanwhile, is in talks with Glencore Plc over a potential takeover, again motivated by the desire to become a stronger force in the red metal.

BHP has bought two undeveloped projects in partnership with Canada’s Lundin Mining Corp. which they have dubbed Vicuña bordering Chile and Argentina. A technical report into Vicuña is expected in the coming months.

BHP’s Australia shares were little changed in early Tuesday trading at A$48.785.

(By Paul-Alain Hunt)