BHP shares drop on $2.3B write-down at Canadian potash project

BHP Group Ltd (LSE:BHP, ASX:BHP) shares saw their largest one-day driblet successful 14 months connected Friday aft the miner disclosed a US$2.3 cardinal write-down tied to its Jansen potash task successful Saskatchewan, Canada, citing higher costs and docket delays.

Shares of the Melbourne-based institution fell 5.6% successful Sydney trading to astir $61 pursuing the announcement, made precocious connected Thursday.

BHP said the 2nd signifier of the Jansen excavation improvement is present expected to outgo US$6.9 billion, up from a erstwhile estimation of US$4.9 billion, aft completing a reappraisal of the project.

First accumulation from the enlargement is present expected toward the extremity of 2031.

The institution said the impairment reflects accrued superior requirements and revised outgo forecasts for the project.

Analysts astatine Jefferies wrote that portion different summation successful Jansen spending had been anticipated due to the fact that BHP had antecedently indicated the estimates were nether review, the latest revision was larger than expected and "still unhelpful," peculiarly fixed what they described arsenic a anemic outlook for potash markets successful the foreseeable future.

Jefferies noted that the latest accommodation marks the 3rd upward revision to Jansen's improvement costs successful little than a twelvemonth and brings cumulative committed concern successful the task to astir US$19.8 billion. The steadfast wrote that execution risks stay due to the fact that astir 84% of Stage 2 operation enactment is inactive ahead.

The analysts estimated the revised spending guidance would trim their nett plus worth estimation for BHP by 1.1% and reiterated a 'Hold' standing connected the stock, penning that they spot amended worth opportunities elsewhere successful the mining sector.

Jansen is simply a cardinal portion of BHP's strategy to grow its vulnerability to potash, a harvest nutrient utilized successful fertilizer production. Stage 1 of the task remains connected way for archetypal accumulation successful mid-2027, according to Jefferies.