Hundreds of jobs are at risk in North Yorkshire after the future of the UK’s most ambitious mining project in a generation was thrown into doubt.
Anglo American said it would cut funding for the Woodsmith fertilizer mine as part of a radical strategy to convince shareholders it was right to reject two takeover bids from rival miner BHP.
Chief Executive Duncan Wanblad has spent weeks plotting a survival plan that includes breaking up the company, including spinning off its De Beers diamond division and its platinum mines.
Wanblad has consistently praised Woodsmith, which was formerly known as Sirius Minerals.
He told The Mail on Sunday in February that he believes he could one day be the “cornerstone” of the entire company.
Job cuts: Anglo American said it would cut funding at the Woodsmith fertilizer mine near Sneatonthorpe in North Yorkshire (pictured)
Anglo still insists it is committed to Woodsmith, but the cuts are brutal.
The group initially planned to spend £800 million a year on Woodsmith between 2024 and 2026.
But it will now generate only £160 million in 2025, and nothing at all in 2026.
The first extraction of polyhalite fertilizer from the mine was scheduled for 2027, but will almost certainly be delayed, possibly by a couple of years.
Anglo wants to wait until making a final investment decision on the project next year before investing more cash.
Until now it has followed the opposite strategy, to the chagrin of institutional investors who have been skeptical of the huge cost overruns of a mine that will extract an unusual type of fertilizer that does not yet have a market.
Even as Anglo makes a final decision, it also wants to find a partner in the form of another investor who can share the cost in the future.
The cuts at Woodsmith came as a surprise to investors, but also to those who work in Woodsmith’s business, which is officially known as Crop Nutrients at Anglo.
The company is in an uproar and the bosses are stunned by the dramatic plans. Layoffs are expected, hiring and new contracts will be frozen and international travel will also be limited, the Mail understands.
Little is known about what specific activities will be halted, although presumably there will be a pause at some point in the construction of the mine shafts. However, nothing is confirmed.
Conservative MP for Middlesbrough South and Cleveland East, Sir Simon Clarke, said he was “very concerned” and that “it will have significant implications for the dedicated workforce”.
He claims there was “no indication” of what was at stake when he called Anglo last week to discuss the company’s position following BHP’s takeover bids.
In addition to affecting Woodsmith’s 1,600-person workforce, small businesses in the area that supply the mine also face uncertainty. But sadly for locals, this is just the latest disappointing turn for a mine that was promised to transform the area and its economy.
Sirius Minerals bought the mine area in 2011. Company boss Chris Fraser and his team spent years negotiating mineral rights with farmers and rallying support in the community.
The scale of the mine and its ambition led thousands of locals to invest savings and pensions in the project once it was listed on the stock market, where it quickly became a retail darling. At one point it had 85,000 individual investors and was in the FTSE 250 from 2017 to 2019.
But the magnitude of the financing needed became the company’s undoing. The infrastructure required is huge, including two mile-deep shafts and a 23-mile tunnel, which is longer than the Channel Tunnel.
The plan was to unearth polyhalite beneath the North York Moors National Park and then transport it underground for processing to Teesside and shipping overseas. Raising the money for this mammoth construction effort proved too difficult after the Government refused to fund a huge funding package.
The company almost closed but was rescued by Anglo American in a £405m cut-price takeover in 2020.
The deal wiped out the investments of many retail shareholders who bought shares when it was booming.
Many of them were Yorkshiremen who felt emotionally invested in the project, which promised to bring jobs and money to a deprived area of the north-east that was previously an industrial heartland.
“I think the locals will feel cheated again,” one resident who worked at Woodsmith told the Mail yesterday.
‘We never got to see this mine being finished.
“The amount of money wasted is horrendous.”
Cliff Weight, an adviser to shareholder advocacy group ShareSoc, said the community would be “very confused” by Anglo’s “mixed messages” about the mine.
“It’s a tragedy,” Weight added yesterday. “It’s very emotional locally; in that area this is similar to the Post Office scandal.”
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