INSIGHT: Anglo American digs deep on UK polyhalite project

Andy Hemphill


LONDON (ICIS)–“Some in the industry expected this project would never get built,” says an Anglo American UK executive, adding: “But you only have to look at the scale of the site to see we’re serious about the project.”

Nestled behind tall, grass-covered berms amid the rolling hills of the UK’s North York Moors National Park, the developmental Woodsmith polyhalite mine has changed completely from the last time ICIS visited in January 2018 – not least thanks to the deeper pockets of global mining major Anglo American.

Formerly owned by junior miner Sirius Minerals, Anglo purchased the project outright in a widely publicised £405m ($535m) buy-out in March 2020 – right before Covid brought the world screeching to a stop.

“It was a rough time,” a second Anglo UK executive says. “Lots of meetings held [for the acquisition] as everyone was racing to get ready to work from home.

“It took around three months to finish the acquisition. It became clear Anglo’s approach to the project would be quite different, both in terms of engineering and product marketing – the resources and expertise we can draw on now are an order of magnitude larger. It has been a total cultural shift.”

The buy-out was a desperate move by Sirius, which was facing collapse at the time.

The company saw its share price crash nearly 50% in mid-September 2019 on news that it was scrapping plans for a $500m bond issue, which would have unlocked a vital revolving credit facility needed to complete the project’s initial construction.

Snapping up the project in the acquisition – for which 80% of Sirius’ shareholders voted for – Anglo launched a bottom-up reworking of the entire mine construction plan.

Amongst the measures taken by Anglo American’s sweeping rework of the Woodsmith project was the selection of new contractors and the withdrawal of Sirius’ 2024 start-up date, which was deemed unworkable under Anglo’s far more stringent, cautious, and measured approach to mine construction.

The rework also saw the scrubbing of Sirius’ triple tunnel boring machine (TBM) structure, which would have seen three metal monsters unleashed under the Moors to drill the project’s 23-mile mineral transport system (MTS) transfer tunnel.

The first TBM launched – the 250m Stella Rose – has made good time, allowing Anglo to save on two additional launches: “By the time it’s finished, the MTS will be the longest single tunnel drive ever – and the longest tunnel in Britain,” says area manager for the tunnel drive Mark Pooleman, with pride.

As for the shafts at Woodsmith itself, the production and service shafts have hit more than 150m and 400m beneath the surface, respectively.

The polyhalite ore seam sits at 1,600m, with an estimated deposit size of around 2bn tonnes.

Ore will be lifted to meet the MTS, which transports the volumes to Teesside for processing via conveyor.

At Teesside the ore will be crushed, granulated and shipped to Redcar Bulk Terminal (RBT) for export to the global market – although Anglo plans to invest in its own purpose-built terminal on the River Tees once the product is flowing well.

The initial aim for the project is an annual production capacity of 5m tonnes/year by 2030, with ramp-up to 13m tonnes subsequently.

Mine life is an expected 50-plus years.

On the surface (and beneath it) Anglo American’s investment looks set to be complete and operational by 2027 – but there is no doubt established players and buyers across the global fertilizer market still question the need for Anglo American’s flagship Poly4 product.

Poly4 includes 14% potassium, 19.5% sulphur, 6% magnesium and 17% calcium, but has never been positioned as a direct substitute for potassium-rich muriate of potash (MOP) fertilizer – even in the Sirius days.

Indeed, Anglo appears to be supercharging Sirius’ efforts to position Poly4 in a league of its own, and is thinking long-term to ensure Woodsmith’s return surpasses Anglo’s initial and subsequent investment.

The company has carried out 3,500 agronomic studies, some 1,500 of which have been processed thus far – and the results show an uplift in crop yields in many high-cash crops.

Of particular interest are crops in key target markets including Brazil, the US and Europe – and in persuading farmers in those nations of the benefits of Poly4.

The underlying message is Anglo knows soil is a farmers’ biggest asset, and the metals major is working to present Poly4 as a positive step to improving yields, sustainability and cash returns on farmers’ crops.

This is a message already put forward by Israel Chemicals’ Boulby polyhalite mine – situated near to Woodsmith – which is mining polyhalite and selling it as Polysulphate around the globe.

ICL’s capacity at its Yorkshire project – which was originally an MOP mine – will be far outstripped by Woodsmith once Anglo’s play is operational.

Always a tough sell in an industry that has seen little change for decades, Anglo’s work to showcase Poly4 as a unique product may nevertheless be assisted by news spilling across the MOP market since 2021 – when the sedate nature of the global potash trade was abruptly overturned.

Indeed, just over two years since Belarusian President Aleksandr Lukashenko grounded Ryanair flight 4978 in May 2021 – kicking off a series of sanctions imposed by Western powers first on Belarus and then on Russia, following the latter’s invasion of Ukraine – supply concerns remain at the forefront of potash players’ minds.

Russian exports are expected to decline 15-20% in 2023 year on year, and though Belarus is exporting increased volumes via borrowed berth space at Russian ports, the nation’s total export volume is expected to be down 40-60% this year on its average 12m-13m tonnes.

Although prompt MOP prices have declined on a combination of weak demand and buyer reluctance, MOP pricing has yet to return to the far lower levels seen pre-flight 4978 – and is not likely to until the Ukraine crisis is resolved and outcast Russia rejoins the global community.

This upheaval could position Anglo’s Poly4 as a suitable alternative choice in a rocky market – although this is far from certain.

As for the watching global fertilizer market, Anglo’s gamble is seen by many players as a long-shot in a well-established trade, and by others as a serious potential rival to established products.

Many, however, question if Poly4 will be successful in carving its own niche: “I wonder how you can place such a large volume [13m tonnes/year]. How will it all find a home?” pondered one European sulphate of potash (SOP) producer’s lead salesperson.

“If someone asked me to put together a marketing plan for Anglo’s stuff I’d be struggling. They’re leaning on the organic credentials, but that’s not much to go on. It’s going to be an uphill battle [for [Anglo American.”

Nevertheless, following ICIS’ visit in May 2023, Anglo’s willingness to complete the project and bring Poly4 to market is clear. The mood at Woodsmith is upbeat, thanks largely to the global mining major’s deep pockets offering job security and a future Sirius Minerals never really had.

Poly4 is coming to the global market. Anglo is confident the market will be ready – and willing – to harness it.

Insight article by Andy Hemphill


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