Anglo American Plc took a $1.7 billion writedown on the giant fertilizer project in the North of England that it rescued from collapse three years ago, and said the mine is now expected to start sales in 2027.
(Bloomberg) — Anglo American Plc took a $1.7 billion writedown on the giant fertilizer project in the North of England that it rescued from collapse three years ago, and said the mine is now expected to start sales in 2027.
Anglo expects annual capital spending on the project of about $1 billion, it said as it reported annual results on Thursday. The company had repeatedly delayed unveiling its development plans, after it bought owner Sirius Minerals Plc in a 2020 deal worth about half a billion dollars.
Click here for key figures from Anglo’s earnings report
The writedown reflects the difference in development approach from Sirius’s plans, after the larger miner spent the last three years overhauling the mine designed by what was essentially a startup, into a project that it sees as more suitable for a company of its size.
“We believe that the changes we have made to the project have had a materially positive impact on the project’s long term attractiveness and prospects,” Anglo said.
The investment in the Woodsmith project forms part of a wider shift at the world’s biggest miners, as they retreat from fossil fuels and seek growth in commodities like fertilizers and metals that are needed for the green-energy transition.
Before Anglo took over, Sirius had been rushing to get into production as fast as possible and had originally envisaged production by 2021 after trying for years to build the project. However, the plan fell apart when it failed to secure funding.
Anglo says it has sought to ensure the operation could be expanded in the future, to make the most of an orebody that could last more than 50 years. The company expects the mine will have a design capacity of 13 million tons a year, and will reach an initial 5 millions a year by 2030.
The mine will produce Poly4, or polyhalite, which is a type of potash found under the North Sea. It’s a relatively unknown type of fertilizer, so Anglo faces the additional challenge of proving how big the market will ultimately be.
Anglo’s plans also come at a time of massive volatility in global fertilizer markets. Prices spiked last year after Russia’s invasion of Ukraine threw the world’s crop-nutrient sector into disarray. While prices have since eased, the long-term outlook remains strong as the global population and its demand for food grows.
The company’s longer-term approach echoes that of rival BHP Group, which is building its own potash mine in Canada. BHP has committed more than $10 billion, an enormous upfront outlay that will allow it to keep expanding the mine in the future as demand for fertilizers grows.
(Updates with details throughout.)
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