BHP delays Jansen potash project as costs surge; logs record copper output
The cost blowouts that could be up to US$1.7 billion represents a significant setback for BHP, which had accelerated potash production following Russia's invasion of Ukraine, anticipating higher fertiliser prices due to supply disruptions from sanctioned Russian and Belarusian producers.
The world's largest listed miner has spent more than a decade trying to break into the potash market as part of its diversification strategy.
BHP attributed the cost blowouts to design and scope changes, inflationary pressures, and lower-than-expected productivity during construction.
BHP said first production from its Jansen Stage 1 potash project in Canada has been pushed back to mid-2027 from the previously targeted end-2026, while capital expenditure estimates have surged to US$7.0 billion to US$7.4 billion from US$5.7 billion.
Adding to the project's challenges, BHP is considering delaying the second stage of Jansen by two years due to concerns about potential oversupply in the global potash market.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'Given potential for additional potash supply coming to the market in the medium term, and as part of our regular review of the sequencing of capital projects under the capital allocation framework, we are considering a two-year extension for the execution of Jansen Stage 2,' the company said.
BHP committed US$4.9 billion towards Jansen's second stage development in October 2023, with first production scheduled before June 2029. The company said it had spent only US$400 million of the committed funds for the second phase.
The miner reported copper production of 2.02 Mt for fiscal 2025, at the upper end of its forecast range. However, it said it expects output to drop to between 1.8 Mt and 2.0 Mt in fiscal 2026, reflecting planned lower grades at its flagship Escondida mine in Chile.
Shares of the company rose 2.9 per cent to A$40.26 by 0144 GMT, outperforming a 1.6 per cent jump in the mining sub-index.
BHP logged record annual iron ore production of 290 Mt, at the upper end of its guidance, while its fourth-quarter output of 77.5 Mt beat consensus estimates.
BHP is also assessing a potential divestment of its Western Australia Nickel assets as part of a review, citing balance sheet impacts from the nickel business. REUTERS
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
AsiaOne
20 minutes ago
- AsiaOne
Chinese engines, shipped as 'cooling units', power Russian drones used in Ukraine, World News
Chinese-made engines are being covertly shipped via front companies to a state-owned drone manufacturer in Russia, labelled as "industrial refrigeration units" to avoid detection in the wake of Western sanctions, according to three European security officials and documents reviewed by Reuters. The shipments have allowed Russian weapons-maker IEMZ Kupol to increase its production of the Garpiya-A1 attack drone, despite the US and EU sanctions imposed in October designed to disrupt its supply chain, according to the sources and documents, which included contracts, invoices and customs paperwork. An internal Kupol document, reviewed by Reuters, showed it signed a contract with the Russian defence ministry to produce more than 6,000 Garpiya this year, up from 2,000 in 2024. The document stated that more than 1,500 drones had already been delivered by April. The long-range drone is being deployed to attack civilian and military targets deep within Ukrainian territory, with around 500 being used by Russia per month, the Ukrainian military intelligence agency said in a statement to Reuters. The European security officials asked that neither they nor their organisation be identified due to the sensitivity of the information. They also requested some specific details in the documents be withheld, such as their dates and the cost of contracts. In September, Reuters reported that Kupol was producing the Garpiya using Chinese technology, including L550E engines made by Xiamen Limbach Aviation Engine Co. A month after the Reuters' report, the European Union and the US sanctioned several companies involved in producing the drones, including Xiamen. In the wake of the sanctions, a new Chinese firm called Beijing Xichao International Technology and Trade has started supplying the L550E engines to Kupol, according to invoices, a Kupol internal letter and transportation documents reviewed by Reuters. The increase in production of Garpiya as well as the new intermediaries supplying parts for the drones are reported by Reuters for the first time. The news agency could not determine how Xichao obtained the engines from the maker Xiamen Limbach. Xiamen Limbach did not respond to a request for comment and Reuters was unable to reach Xichao. IEMZ Kupol, Russia's trade and industry ministry and the defence ministry also did not respond to a request for comment. In a statement to Reuters, China's foreign ministry said it was unaware of the export of parts for the Garpiya and it has controlled foreign sales of dual-use goods in line with China's own laws and international obligations. "China has always opposed unilateral sanctions that lack basis in international law and are not authorised by the UN Security Council," the statement said. The European Commission did not immediately respond to a request for comment. Both the US and E.U. have repeatedly imposed sanctions on companies in third-party countries, including China, alleged to have provided dual-use technology to Russia. Kupol has been sanctioned since December 2022 by the EU and December 2023 by the US for its involvement in Russia's defence sector. [[nid:720338]] Diplomatic warnings European Commission President Ursula von der Leyen is due to travel to China for a summit with Chinese President Xi Jinping and Premier Li Qiang on Thursday, amid tensions over Beijing's support for Russia's war effort. The European Union's top diplomat Kaja Kallas told Chinese Foreign Minister Wang Yi on July 2 that Chinese firms' support for Russia in the war posed a threat to European security and she urged China to cease trade that sustains Russia's military machine, the EU said in a statement. Meia Nouwens, senior fellow for Chinese security and defence policy at the London-based International Institute for Strategic Studies (IISS), said China's prime concern was to help sustain Russia's war effort to ensure the United States remained focused on Ukraine. "This does not help China and Europe come closer together, diplomatically," she said. China says it imposes strict controls on the export of drones and their parts and has never provided either side of the war in Ukraine with lethal weapons. A person familiar with Beijing's thinking on the issue said that China produces around 75 per cent of world's drones, with the majority not for military purposes; if Russia was using them as weapons, then the same was also true of Ukraine, the person added. Ahead of Thursday's summit, one European official said the EU was not asking China to cut economic ties with Russia but to strengthen customs and financial controls to reduce the flow of specific dual-use goods. The Garpiya, which means harpy in Russian, is based on the Iranian-made Shahed drones but relies on Chinese technology, the three European sources said. [[nid:720276]] The Ukrainian military intelligence agency said the Chinese-made components in the drone included the engine, control systems, and navigation equipment. The engines were shipped by Xichao to a Russian front company identified as SMP-138, which then forwarded them to a second Russian firm LIBSS, according to another internal Kupol document, seen by Reuters. Abram Goldman, registered as the owner of SMP-138, did not respond to an emailed request for comment. LIBSS also did not respond to Reuters' questions. A contract for LIBSS to supply Kupol with the engines, reviewed by Reuters, stated they would be described as cooling units in shipping documents because of their sensitivity. The delivery route was from Beijing to Moscow then to Izhevsk, where Kupol has manufacturing facilities. Describing them as cooling units allowed the goods to be exported to Russia without alerting Chinese authorities, the three security officials said. Transportation documents reviewed by Reuters showed that Sichuan Airlines and China Southern Airlines, China's largest carrier, had transported components for the drones to sanctioned Russian companies since October. China Southern did not respond to Reuters' questions and Sichuan could not be reached for comment. [[nid:720459]]
Business Times
20 minutes ago
- Business Times
Japan trade deal sparks hope for US investors, frustration for automakers
[DETROIT] Shares of General Motors, Ford Motor and Jeep-maker Stellantis, some of the biggest automakers in the US, rallied on Wednesday after news of a trade deal that will reduce tariffs on imported Japanese cars, as investors saw it as a sign of more deals to come. But the companies are not celebrating. Automakers importing vehicles into the US from Japan now face a 15 per cent levy, according to terms of the deal outlined on Tuesday by US President Donald Trump, down from 27.5 per cent. GM shares rallied 9 per cent and Stellantis rose 12 per cent, as market watchers said they anticipated further agreements could reduce other trade barriers that have hurt the companies' profits. Ford shares rose about 2 per cent. The automaker is less exposed to tariffs because it produces more of its US-sold vehicles domestically. On Wednesday, the European Union and United States were nearing a trade deal that would also set a 15 per cent tariff on European imports. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up GM, Ford and Stellantis have been paying up to 25 per cent on vehicles imported from Mexico or Canada, depending on how much US content is in the vehicles. The companies are concerned they could soon be paying higher tariffs on vehicles assembled in Mexico or Canada than on vehicles with significantly less US content made in Japan or the United Kingdom. Some lobbyists also expressed alarm that if South Korea strikes a similar deal with the US, it could become a low-cost market to assemble cars and trucks. 'They could be the new Mexico,' one lobbyist told Reuters. The American Automotive Policy Council, which represents the Detroit Three, criticised the deal, saying it creates an easier path for Japanese imports than for some cars built in North America. Even before Tuesday's deal, Detroit automotive executives raised concerns that Trump's trade policy could end up giving an edge to foreign automakers who do not invest as heavily in US manufacturing. 'This is a bonanza for our import competitors,' Ford CEO Jim Farley said in February, when Trump initially proposed levies on Mexico and Canada, but not on major automotive centres such as South Korea. The United Auto Workers union, which represents workers at the Detroit Three automakers, said it was 'deeply angered' by the deal. 'What we've seen so far makes one thing clear: American workers are once again being left behind,' the union said in a statement on Wednesday evening. The Japan trade announcement came the same day General Motors said tariff costs knocked US$1.1 billion from its bottom line, hurt by a battery of levies including 25 per cent taxes on imports from Canada and Mexico, and 50 per cent on steel and aluminum imports. Industry consultant and former GM executive Warren Browne said the Japan deal 'put all vehicles produced in Mexico and Canada by the Detroit Three at a disadvantage' because they face higher levies than Toyota vehicles shipped in from Japan, for example. That could allow the foreign brands to undercut US car companies on price. Toyota, Subaru and Mazda are among the most reliant companies on Japan-produced vehicles for their US sales, and stand to benefit most from the lower tariffs, according to business-analytics firm GlobalData. Toyota imported roughly 500,000 vehicles from Japan last year. Japanese automotive stocks soared after the trade deal announcement. Autos Drive America, which represents those Japanese automakers along with other foreign car companies operating in the United States, on Wednesday praised the trade deal, saying it would lead to further factory investment in the US The deal is good news for Wade Kawasaki, executive chairman of the Wheel Group, a collection of aftermarket wheel, tire and accessory companies based in California. Kawasaki said the group has been trying to break into some aspects of the Japanese market, and the lessening levies will help with that. 'There is a certain group of customers who want American-made products. Those are the ones we were going to get,' he said. REUTERS
CNA
20 minutes ago
- CNA
Asian shares, Aussie dollar climb on trade, earnings optimism
TOKYO :Shares in Asia rallied and the Australian dollar hit an eight-month high on Thursday as optimism over earnings and trade supported demand for higher yielding assets. Tokyo's broad Topix gauge of shares hit an all-time high, following new records on Wall Street overnight, after a trade pact between Japan and the U.S. stoked speculation more deals would appear soon to head off sweeping tariffs. Nasdaq and S&P futures rose after results by Google parent Alphabet beat estimates to kick off the "Magnificent Seven" earnings season. The U.S. has also reached deals with the Philippines and Indonesia and an agreement with the European Union is also expected. "Worst case concerns about tariffs in the U.S. are probably dissipating to some degree at the moment, but nonetheless, tariffs are going up and that is a hurdle for consumers," Brian Martin, ANZ's head of G3 economics, said in a podcast. The EU and U.S. are closing in a trade deal that would impose 15 per cent tariffs on European imports, while waiving duties on some items, according to officials from the European Commission. Meanwhile, Treasury Secretary Scott Bessent said U.S. and Chinese officials will meet in Stockholm next week. Second-quarter earnings season is underway in the U.S., with 23 per cent of the companies in the S&P 500 having reported. Of those, 85 per cent have beaten Wall Street expectations, according to LSEG data. Results from Magnificent Seven members, whose results have powered indexes to previous peaks, are in the spotlight for guidance on spending and returns surrounding artificial intelligence (AI). Alphabet strongly beat estimates and cited massive demand for its cloud computing services as it hiked its capital spending plans. But electric car maker Tesla posted its worst quarterly sales decline in more than a decade and profit that trailed analyst targets. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 per cent. Japan's Topix surged for a second day, rising 1.4 per cent to surpass its previous all-time high reached last year. The Australian dollar, a common proxy for risk sentiment, fetched $0.66, just off $0.6604 hit earlier, which was the highest since November 2024. The U.S. dollar dropped 0.1 per cent to 146.38 yen. U.S. crude climbed 0.4 per cent to $65.5 a barrel. Spot gold was traded at $3,390.84 per ounce, up 0.1 per cent. In early trades, pan-region Euro Stoxx 50 futures shot up 1.3 per cent at 5,435, while German DAX futures were up 1.3 per cent. U.S. stock futures, the S&P 500 e-minis, were up 0.13 per cent and Nasdaq contracts climbed 0.4 per cent.
