Global mining giant BHP Billiton (BHP.US) will book a $2.3 billion impairment charge against its massive Jansen potash project following a fresh round of cost overruns and schedule delays announced for the Canadian expansion.
The world's largest miner has frequently exceeded budgets on the contentious project. After a review, the company stated on Thursday that the cost for the Stage Two expansion is now projected at $6.9 billion, a significant increase from the prior forecast of $4.9 billion, with production start-up anticipated by the end of 2031.
BHP decided to advance the Jansen expansion in 2023 after fertilizer prices surged in the wake of the Russia-Ukraine conflict, even though the first stage of the mine was still years away from initial production. Since then, fertilizer prices have declined, and costs for both project stages have risen sharply, a factor that has long made the venture unpopular with some investors.
Following years of debate over the massive capital commitment, BHP finally approved the construction of the Saskatchewan-based Jansen potash mine in 2021. With a potential operational life of a century, BHP views the project as a future business that could rival the scale of its flagship Australian iron ore operations. First production from Jansen's Stage One is expected to commence next year.
The trajectory of fertilizer prices has been a rollercoaster since the onset of the Russia-Ukraine war in 2022. The conflict disrupted supplies from major exporters Russia and Belarus, while soaring natural gas prices—which constitute 80% to 90% of the cost of producing nitrogen-based ammonia—sent global fertilizer prices to historic highs in 2022. For example, the average price for muriate of potash (MOP) soared to $923 per tonne during the 2022 harvest.
From 2023 through 2025, as geopolitical shocks were gradually absorbed by the market and supply chains were reconfigured with reduced sanctions impact on Belarus and expanded exports from countries like Canada, fertilizer prices fell significantly for two consecutive years. By 2025, the global market had largely normalized, with MOP spot prices declining to a range of $360 to $390 per tonne, prompting miners like BHP to take asset impairments on their potash projects due to the price slump.
However, the fertilizer market experienced another upheaval in 2026. Intensified conflict in the Middle East and the temporary closure of the Strait of Hormuz—a chokepoint for nearly one-third of global seaborne fertilizer trade—triggered renewed supply tightness. The World Bank's latest 2026 report indicates that the global fertilizer price index surged by over 12% quarter-on-quarter in the first quarter of this year, with the Bank forecasting an average price increase of more than 30% for the full year 2026. Urea prices, for instance, spiked 46% month-on-month during the spring to over $725 per tonne, a four-year high.
While current fertilizer prices remain below the extreme peaks of 2022, this second wave of price increases driven by geopolitical risks is presenting global agriculture with its most severe cost challenge since that period.