BHP confirms higher potash costs, boosts copper guidance

(Sharecast News) - BHP Group reiterated its commitment to a planned potash project in Canada on Tuesday, despite costs once again sharply rising. Updating on first-half production, the world's largest miner noted that the Jansen stage 1 project was now 75% complete with production on track to begin in mid-2027. However, costs estimates have been hiked by 20%.

Melbourne-based BHP said total investment in the project was set to come in at $8.4bn, including contingencies. Costs had previously been expected to be between $7bn and $7.4bn, itself an increase on initial estimates, made when the project was approved in August 2021, for $5.7bn.

It attributed the latest hike to inflationary and real cost escalation pressures, design development and scope changes, and lower productivity outcomes.

However, Mike Henry, BHP chief executive, insisted: "Jansen will be a long-life, low-cost and scalable asset that will add a new, future-facing commodity to BHP's portfolio which we expect to generate value for shareholders for many decades."

The London-listed miner also boosted its annual copper production guidance on Tuesday, following a strong first half.

It now expects to produce between 1.9m and 2m tonnes this year, up from its previous range of 1.8m to 2m tonnes.

In the six months to 31 December, copper production was 948,100 tonnes, unchanged on the same period a year previously.

Copper prices have soared in recent months, on the back of strong demand and supply disruptions at competitor mines.

BHP said the increased guidance "enables us to further capitalise on record copper prices. We are also advancing our copper growth options".

Iron ore production came in at 133.8m tonnes, up 2%, during the half. Western Australian Iron Ore - an integrated system of five mines and four processing hubs - achieved "record" first-half production and shipments, BHP noted, "positioning us well ahead of the typically wet third quarter".

As at 0845 GMT, BHP's London-listed shares were down 2% at 2,381p.