Duncan Wanblad’s eyes light up when he talks about Yorkshire. The Anglo American chief executive oversees a mining empire that spans the globe and extracts precious resources including gold, copper and De Beers diamonds.
But what really captivates him is the development of the Woodsmith fertilizer mine in the North York Moors National Park, a stone’s throw from the coastal town of Whitby.
Everything about the project is large. Beneath the picturesque landscape lie deposits of polyhalite, a new type of fertilizer, the largest in the world. The two mine shafts are each a mile deep. Engineers are drilling a 23-mile-long transport tunnel to transport large quantities of the ore from the mine to a port on Teesside.
Unfortunately for Wanblad, the bill for the project is also huge. It has risen since his predecessor, Mark Cutifani, acquired Woodsmith Mine owner Sirius Minerals for £405m in early 2020.
Given that Anglo has already spent – at last count – £2bn on the programme, do you think Anglo was right to take over the programme? The cost of the project is expected to rise to at least £7 billion in total.
Enthusiast: Anglo American boss Duncan Wanblad, inset and the Woodsmith mine
“Yes,” Wanblad says enthusiastically. ‘There are a number of elements of that decision that remain absolutely true today.
‘The first is that the world will struggle with nutrition as the population grows. Definitely.’ That, she maintains, means demand for fertilizer will increase dramatically. Perhaps most importantly for investors, he is convinced the project will generate big profits.
“This will generate huge amounts of money for decades,” he says. He believes it will become “the cornerstone” of Anglo’s business portfolio in the future. Actually? The cornerstone of the entire company?
“Absolutely,” he says, adding that the polyhalite deposit could extend under the North Sea all the way to Germany. “It’s something the world absolutely needs,” she insists.
If Woodsmith were to become the lynchpin of the 107-year-old mining giant, it would be a big change in light of the fact that the acquisition was a rescue deal.
Thousands of small local investors who had invested their savings in Sirius felt that Anglo had taken over the company on the cheap, and may not have liked the idea that it could reap a bonanza.
However, that is still a ways off, if it will ever happen. The final decision on whether to go ahead with the mine will not be made until next year, even though construction is already underway. Production is not expected to begin until 2027.
And for all Wanblad’s enthusiasm about Woodsmith, Anglo is looking for a partner – possibly a sovereign wealth fund or other mining group – to take a stake and spread the risk.
As Bank of America analysts have noted, Woodsmith is a project the company loves but Square Mile hates. Skeptics believe that costs could continue to rise and that there may not actually be a huge market for polyhalite.
Wanblad is betting big money on the project at a time when it is also embarking on cost cuts and changes to the wider business, including its world-famous De Beers diamond group.
Maybe this isn’t exactly what you signed up for. An engineer by training, the South African has spent more than 30 years in the industry, much of it at Anglo.
When he took the reins from Cutifani in 2022, the group was in poor health, having just posted record profits and showered shareholders with almost £5bn in dividends. But those windfall gains were fueled by a post-lockdown commodities boom that was losing steam.
As his second year in office draws to a close, the stock price has halved since his term began. Investors were left confused and angry by a new strategy to make changes to production targets and amounts in some parts of the business.
A nadir was reached in December when, during what was expected to be a mundane update on production, Anglo said it needed to cut costs by £1.4bn, cut jobs and reduce its production of lucrative raw materials such as ore. of iron and copper.
Few had suspected until then that Anglo needed such radical action. Two of its largest companies are struggling. Platinum and similar metals are reeling due to the slowdown in the Chinese economy. China is the world’s second-largest market, after Europe, for platinum for use in industry and jewelry.
The diamond market has been hit by lower spending on luxury jewelry and the rise in popularity of lab-grown gems.
Wanblad believes that both companies are at the “bottom” of a huge price drop. “It’s probably the worst we’ve seen in the last 30 years,” he says. “And that puts a lot of pressure on the entire company.” When will things start to improve? “You know, I wish we had that crystal ball,” he says. With questions about how fast the global economy will grow and dozens of elections around the world this year, he adds, the market still feels “volatile.”
He says: ‘It could be another year. It could be another two years. We just don’t know.
“I think this is probably one of the most disturbing moments I’ve ever had in the industry,” he admits.
The falling share price has led to speculation that the company could be a takeover target.
Diplomatically, he says he’s just sticking to his day job.
However, it rules out for the moment that Anglo makes its own acquisitions.
Wanblad maintains that having a diverse portfolio with a variety of metals and minerals means the company can spread its risks.
However, the weight of the diamonds’ slide became clear last week when Anglo wrote down the value of its stake in De Beers by £1.3bn in the company’s annual results.
Profits were cut by a third and the dividend was cut.
Wanblad is now “systematically reviewing” all assets the company owns. He doesn’t seem afraid to kill any of his loved ones, aside from Woodsmith.
Whatever the short-term outcome of the restructuring, these actions early in his tenure are likely to define his legacy.
Mining attracts great personalities. But when we meet in Cape Town, he speaks softly and is more corporate than arrogant.
Perhaps part of his thoughtful attitude is also due to his understanding of exactly how the industry is perceived.
Raw materials such as copper, rare earth metals and lithium are used in electric cars and many other applications. All of these resources are needed on an unprecedented scale in the green transition.
Historically, mining has a reputation for being dangerous and harmful to the environment.
It is also reputed to have very poor governance. Is that a bother?
“It doesn’t frustrate me,” Wanblad says. ‘I think there are some very legitimate reasons why it is perceived as bad. I think it negatively affected many, many host communities, and perhaps many countries, in the early years of mining.
“We have to do it differently,” he says. Otherwise, the harm caused by the industry could outweigh the benefits of the products it extracts.
The “resource curse” – the failure of many countries to benefit from their natural wealth due to exploitation or mismanagement – is “a very real thing”. Wanblad adds: “It is up to responsible mining companies to change that.”
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