Anglo American writes off £1.4bn on Yorkshire potash mine amid spiralling costs and delays
Anglo American has written £1.4billion off the value of its huge North Yorkshire fertiliser mine amid spiralling costs and delays.
The FTSE 100 mining giant rescued the Woodsmith mine near Whitby from collapse three years ago after its former owner Sirius Minerals failed to secure crucial funding.
Anglo paid £405million for the project, which is located in the North York Moors National Park. But Woodsmith turned out to be in a far worse state than Anglo first thought.
Losses: Anglo American rescued the Woodsmith mine from collapse three years ago after its former owner Sirius Minerals failed to secure crucial funding.
The company has been saddled with mushrooming costs ever since – so far spending a further £1.1billion – and was forced to go back to the drawing board to assess the entire construction plan and timeline.
Anglo now estimates it will cost £5billion in total for it to open in 2027. The Sirius team initially said the mine could be producing polyhalite – a form of potash – by 2021.
Under Anglo’s plans, it could remain open for 50 years.
The project is incredibly complicated as it demands two shafts – both a mile deep – to be built at the main site.
It is also building a tunnel longer than the Channel Tunnel to deliver rocks from the mine to a processing plant on Teesside.
Sirius was a stock market darling for years as it amassed a following of thousands of retail shareholders, many of them Yorkshire locals.
At one point there were 85,000 individual investors.
But when the company failed to secure funding in 2019 and its share price collapsed, some backers lost large chunks of their savings and pensions.
Jefferies analyst Christopher LaFemina said the writedown was ‘unhelpful’. A final investment decision for Woodsmith is still two or three years away.
Anglo released the Woodsmith update alongside annual financial results that showed profits slumped 30 per cent to £12billion on the back of falling commodity prices and rising costs.