BHP shares tumble after Canadian potash projects’ cost blow outs, investors dismiss stumble

BHP shares tumbled four per cent in London overnight after it warned costs for its Canadian potash projects had blown out to $US6.9 billion ($A9.8 billion).

The news took the froth off the top of a stunning 46 per cent six-month bull run that sent the miner’s shares to a record closing high of $65.59 on Wednesday.

The miner’s mixed bet on fertiliser ingredient potash will see it book a $US2.3 billion ($3.3 billion) write-down in its annual results, after it flagged unexpectedly high costs at its Jansen mine in Saskatchewan, Canada.

Brandon Craig, BHP’s President for the Americas, defended the project’s problems and said he still expects to see a healthy return on investment.

“The combined Jansen Stage 1 and 2 will be a low-cost, long-life asset with an almost 60-year mine life and is expected to generate benefits for shareholders for decades,” he said.

Shares hit record high

BHP’s spectacular six-month rise to a $330 billion valuation now makes it easily the largest company on the Australian Securities Exchange as investors buy into it as a hedge against inflation and winner from strong commodity prices.

“The shares have also climbed on relief about this Middle East peace deal, it removes a tail risk about a global slowdown or worse recession,” said Tony Sycamore a Market Analyst at IG.

BHP’s share market gains have also outpaced those of rival Pilbara iron ore giants Rio and Fortescue Metals as it now earns more profit from copper than iron ore, according to Sycamore.

“Data out of China this week was dire,” he said.

“Housing prices fell for a fifth straight month and that pushed iron ore to a three-month low.

“But with copper, BHP has that future-facing commodity now.”

BHP labelled AI winner, best stock on ASX

The global mania for investments linked to the rise of artificial intelligence and copper demand likely played a part in BHP’s staggering start to 2026, said David Tuckwell the co-founder and chief investment officer of ETF Shares.

Mr Tuckwell argues BHP’s copper profits mean the stock is unique in that it now attracts buyers from both thematic and systematic investment funds.

These are popular funds that buy companies because they’re considered beneficiaries of investment trends or tailwinds, rather than because the companies are considered good value on a standalone basis.

“Two of the most popular trades in 2026 have been AI infrastructure and the so-called ‘HALO’ trade: heavy assets, low obsolescence, as those are immune to AI disruption,” said Mr Tuckwell.

“BHP is in the highly irregular position of falling into both categories. The miner is AI relevant given the demand for copper from AI data centres is surging. And also part of this whole HALO trade: no-one believes that AI is going to disrupt mining.”

Mr Tuckwell even declared BHP the best stock to buy on the market right now and argued its shares will stay above $60 over the long term.

Despite the cost overruns at its potash projects in Canada, Mr Tuckwell said said the fertiliser ingredient is essential to global food production and still a sound long-term bet for investors.

In April, BHP also struck a deal with Chinese-state backed China Mineral Resources Group to supply iron ore after months of tense negotiations.

Mr Tuckwell said this supports the investment case for the miner and encouraged investors to bid shares higher.

Investment bank UBS Australia has a fair value of $60 on the shares as its base case, although this rises to $74 on the assumption existing or spot commodity prices do not retreat.

UBS’ analyst Lachlan Shaw forecasts benchmark 62 per cent purity iron ore prices to average $US100 a tonne through 2026, before sliding slightly to average $US95 a tonne in 2027.

This compares to spot prices fetching $US101.28 on Friday morning.