By Rhiannon Hoyle

Mining giant BHP Group flagged rising costs and delays at a giant potash project in Canada and said it may sell its Australian nickel operations, as it reported record annual iron ore and copper production.

Australia-based BHP, the world's biggest miner by market value, has been reshaping its business to bet on an accelerating energy transition and global population growth via investments in copper and potash, a fertilizer ingredient. The miner currently relies on the steel ingredient iron ore for more than half its earnings.

The company said Friday it faces rising costs at the Jansen potash project in Canada's Saskatchewan province, its only major development currently under construction.

The miner now expects the first stage of the project will cost between $7.0 billion and $7.4 billion to build, up from $5.7 billion previously. It may also return to an earlier target for first output around mid-2027, instead of its most recent goal of achieving production by the end of next calendar year.

BHP reported that stage of the project is 68% complete. It said its estimates are currently under review and it would provide investors with a firm view on timing and costs later.

The company said it is also reviewing Jansen's second stage, which is roughly 11% complete. BHP may delay first production from that expansion by two years, to fiscal 2031, because it reckons there might be more potash supply coming into the market over the medium term than previously envisaged.

"The fundamental outlook for potash is very challenging, in our view," Jefferies analysts said in a note.

BHP placed big bets on demand for potash as it pulled back on other investments, including in coal and nickel.

The miner last year shuttered its unprofitable Australian nickel operations due to a global glut of the metal, caused by a sharp rise in supply from operations in Indonesia.

BHP, which intends to review that decision by early 2027, on Friday said it is also assessing whether to sell the nickel business. "Any decision to divest will be subject to an assessment against other options, including continuing temporary suspension, restart or closure," BHP said in its quarterly report.

BHP had considered a sale of the operations known as Nickel West as recently as 2019, but chose to retain them as expectations of a battery boom intensified.

In the quarterly report, BHP recorded iron-ore production of 263.0 million metric tons for the 12 months through June, up 1% on the year earlier.

The result beat market expectations, with analysts having forecast annual output around 260.8 million tons, according to a consensus compiled by Visible Alpha. The company had guided to output between 255 million and 265.5 million tons.

The miner has been gradually lifting iron-ore output from pits in remote northwest Australia, where it reported record annual production and shipments. BHP said it expects to produce between 258 million and 269 million tons of iron ore in the coming year.

In its copper business, the second biggest contributor to BHP's earnings, the miner reported full-year production of around 2.017 million tons, up 8% year over year. The company had projected annual copper output of between 1.845 million and 2.045 million tons.

BHP said it expects to produce between 1.8 million and 2.0 million tons of copper in the year ahead.

The company has been producing more copper in Chile, where mining at the giant Escondida operation, it runs in the Atacama Desert, shifted into areas of higher-grade ore. Escondida--the world's top source of copper concentrates and cathodes, used in home appliances, power grids, and cars--achieved its highest output in 17 years, BHP said.

Chief Executive Mike Henry said global commodity demand has been resilient in 2025 so far. "That resilience largely reflects China's ongoing ability to grow its overall export base despite a significant decline in exports to the USA, and its ability to deliver robust domestic demand despite the dislocation in the property sector," he said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

July 17, 2025 21:33 ET (01:33 GMT)

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