Anglo American reduces fertiliser production at risk of 1,650 jobs

Anglo American has decided to delay and drastically reduce the Woodsmith Fertiliser Mine under the North York Moors. This decision could affect 1,650 British jobs.

While Duncan Wanblad is Anglo’s Chief Executive, he insists that the business will still be “stonking” in the future, he reduced capital expenditures from $3 billion to $1 billion.

Budgets have been reduced from $1 billion per year to $800 millions, $200 million and then zero.

The mine was originally scheduled to begin production in 2027 but is now on hold indefinitely. Anglo would also need to find financial partners who could shoulder some of the cost to revive the mine, as it wants to reduce its debt.

Anglo confirms that roles will be reduced over time for both employees and contractors. This includes the Worley and Redpath Mining Engineering groups.

He said that “we will slow down things in a controlled manner over the next couple of months.” He said that certain elements of the project would be stopped, while others would move slowly so as to not degrade the physical project. Once we have a stronger balance sheet and brought on a co-investor, we will ramp up the pace again.

The decision, whether you call it a mothballing, a pause or a serious blow , is seen as a new threat to the project, which has over the years captured the imagination of investors, engineers and farmers but proved to be extremely difficult to execute.

Sir Simon Clarke (MP for Middlesbrough South & East Cleveland) called the decision a “very unwelcome shock” and said that he was not informed of any changes to the schedule when he met with Anglo executives in the last week. He said that the decision would have a significant impact on his dedicated employees, which is why he was so concerned.

Since the project’s conception in 2011, superlatives are flying. The mineshafts were to be dug more than 5,000ft below the national park, and the ore would then be transported through a tunnel of 23 miles for processing before export in Teesside. The mine would have the longest tunnel and deepest mine of Europe, and provide the world’s farmer with ample supplies of polyhalite – a new fertiliser that is rarely used. Over the next 50 years, it was estimated that the mine will generate £100 billion in revenues, mainly through exports.

The 23-mile tunnel will connect the Woodsmith mine to a terminal for processing on the coast.

Environmental campaigners also criticised the project, stating that such a development was inappropriate for a national reserve. The RSPB, the Caravan Club and other prominent opponents were also against it.

Anglo reports that the project has been moving forward well in recent years, despite the fact that it took 13 years to complete and many financial setbacks. This includes the £400million rescue of Sirius Minerals by Anglo, which will take place in 2020. Around 17 miles of tunnel have been completed, and two mineshafts are sunk at depths of 2,600ft & 2,000ft.

Tom McCulley is the chief executive officer of Anglo Crop Nutrients. He said, “I understand that this announcement may create uncertainty but we will keep all our employees and community stakeholders informed as we work out the details of what this will mean for everyone.”

He said that critical technical studies will be completed by 2025. This would pave way for syndication to one or several strategic partners.