Reports related to this article:
Project(s): View 2 related projects in PECWeb
Released March 13, 2023 | GALWAY, IRELAND
en
GALWAY, IRELAND--March 13, 2023--Written by Martin Lynch, European News
Editor for Industrial Info (Galway, Ireland)--Anglo American plc (London, England) has taken a writedown of US$1.7 billion in its 2022 full financials as a result of project problems with its U.K. fertilizer mine, Woodsmith.
The company blamed additional development costs and delays at the mining project, which has the potential to become the world's largest polyhalite mine with a lifespan of up to 50 years. Polyhalite is a naturally occurring mineral that contains significant amounts of sulfur, magnesium, potassium and calcium plus numerous micronutrients, making it an increasingly popular choice for lower-carbon, sustainable and organic farming. Located in the northeast of the country, the Woodsmith mine sits under the North Yorks Moors National Park and is the largest mining project the U.K. has seen in decades. Work is well underway and is expected to cost more than US$3 billion to US$4 billion to complete. Industrial Info is tracking eight key projects worth more than US$3.5 billion in combined investment.
"As noted in a number of market updates throughout 2022, we are enhancing the project's configuration--including the capacity of the shafts and other infrastructure to accommodate higher production volumes and more efficient and scalable mining methods over time," the company stated. "It means an extension of the development schedule and the capital budget, compared to what was previously anticipated. In light of these changes, we now expect first product to market in 2027, with an annual capital investment of around US$1 billion. We also expect design capacity to increase from c.10 million tonnes per annum (mtpa) to c.13 mtpa, subject to studies and approval. US$0.8 billion is approved for 2023, with the bulk of initial spend on the shaft sinking and tunnel boring activities. As usual in developing underground mines, the schedule will largely be determined by the ground conditions encountered as sinking activities progress."
Previous estimates had the mine entering operation with an output of 10 mtpa of the POLY4 product in 2024. The company now expects first production will not start until 2027 and with a more modest output of 5 mtpa by 2030. Chief Executive Duncan Wanblad told media: "Depending on how we shape and develop the markets from there, we will expand it from 5 million tonnes to 13 million tonnes. We have taken a writedown on it now because the timeline and budget have been extended... but absolutely be in no doubt that we are setting Woodsmith up to generate significant cash flows for many, many decades, we'll be building it out now until 2027."
Last year, the company awarded contracts for the shaft-sinking operations, programme management services and construction management. The service shaft is now more than 360 meters deep, while shaft sinking began in January 120 meters below the surface for the production shaft, the company said. Three intermediate shafts will provide both ventilation and additional access to the mineral transport system (MTS) tunnel. The Lockwood Beck intermediate access shaft was completed last year and connected to the tunnel. Work on the MTS shaft at the mine head progressed through 2022 and is 85% complete, and the excavation at the final intermediate access shaft at the Ladycross site commenced in early 2023. The company stated: "The mineral transport tunnel is now past the 21-kilometer (km) point and is more than 56% complete, progressing at rates not seen since the start of the tunneling activities."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The company blamed additional development costs and delays at the mining project, which has the potential to become the world's largest polyhalite mine with a lifespan of up to 50 years. Polyhalite is a naturally occurring mineral that contains significant amounts of sulfur, magnesium, potassium and calcium plus numerous micronutrients, making it an increasingly popular choice for lower-carbon, sustainable and organic farming. Located in the northeast of the country, the Woodsmith mine sits under the North Yorks Moors National Park and is the largest mining project the U.K. has seen in decades. Work is well underway and is expected to cost more than US$3 billion to US$4 billion to complete. Industrial Info is tracking eight key projects worth more than US$3.5 billion in combined investment.
"As noted in a number of market updates throughout 2022, we are enhancing the project's configuration--including the capacity of the shafts and other infrastructure to accommodate higher production volumes and more efficient and scalable mining methods over time," the company stated. "It means an extension of the development schedule and the capital budget, compared to what was previously anticipated. In light of these changes, we now expect first product to market in 2027, with an annual capital investment of around US$1 billion. We also expect design capacity to increase from c.10 million tonnes per annum (mtpa) to c.13 mtpa, subject to studies and approval. US$0.8 billion is approved for 2023, with the bulk of initial spend on the shaft sinking and tunnel boring activities. As usual in developing underground mines, the schedule will largely be determined by the ground conditions encountered as sinking activities progress."
Previous estimates had the mine entering operation with an output of 10 mtpa of the POLY4 product in 2024. The company now expects first production will not start until 2027 and with a more modest output of 5 mtpa by 2030. Chief Executive Duncan Wanblad told media: "Depending on how we shape and develop the markets from there, we will expand it from 5 million tonnes to 13 million tonnes. We have taken a writedown on it now because the timeline and budget have been extended... but absolutely be in no doubt that we are setting Woodsmith up to generate significant cash flows for many, many decades, we'll be building it out now until 2027."
Last year, the company awarded contracts for the shaft-sinking operations, programme management services and construction management. The service shaft is now more than 360 meters deep, while shaft sinking began in January 120 meters below the surface for the production shaft, the company said. Three intermediate shafts will provide both ventilation and additional access to the mineral transport system (MTS) tunnel. The Lockwood Beck intermediate access shaft was completed last year and connected to the tunnel. Work on the MTS shaft at the mine head progressed through 2022 and is 85% complete, and the excavation at the final intermediate access shaft at the Ladycross site commenced in early 2023. The company stated: "The mineral transport tunnel is now past the 21-kilometer (km) point and is more than 56% complete, progressing at rates not seen since the start of the tunneling activities."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
