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 slash funding at the Woodsmith fertiliser 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 hiving off its diamond arm De Beers and platinum mines.
Wanblad has constantly lavished praise on Woodsmith, which was previously known as Sirius Minerals.
He told The Mail on Sunday in February he believes it could be the ‘cornerstone’ of the entire company one day.
Job cuts: Anglo American said it would slash funding at the Woodsmith fertiliser mine near Sneatonthorpe in North Yorkshire (pictured)
Anglo still insists it is committed to Woodsmith – but the cuts are brutal.
The group was initially planning to spend £800million a year on Woodsmith between 2024 and 2026.
But it will now pump in just £160million in 2025 – and nothing at all in 2026.
The first extraction of the fertiliser polyhalite from the mine was due in 2027 but will almost certainly be delayed, possibly by a couple of years.
Anglo wants to wait until it makes a final investment decision on the project next year before ploughing in more cash.
It has been following the opposite strategy until now, to the chagrin of institutional investors who have been sceptical about the vast cost overruns for a mine that will be digging up an unusual type of fertiliser that does not yet have a market.
Even when 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 to Woodsmith were a surprise to investors but also to those working in the Woodsmith business, which is officially known as Crop Nutrients at Anglo.
The company is in uproar, with bosses stunned about the dramatic plans. Redundancies are expected, recruitment and new contracts frozen, and international travel will also be limited, the Mail understands.
Little is known about what specific activities will stop, though presumably there will be a pause at some point in the construction of the mine shafts. Nothing is confirmed, however.
Conservative MP for Middlesbrough South and East Cleveland Sir Simon Clarke said he was ‘very concerned’ and that it will ‘have significant implications for the dedicated workforce’.
He claims there was ‘no hint’ of what was afoot when he had a call with Anglo last week to discuss the company’s position following the BHP takeover offers.
As well as hitting Woodsmith’s 1,600-strong workforce, small businesses in the area who 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. The business’s boss Chris Fraser and his team spent years negotiating mineral rights with farmers and drumming up support in the community.
The scale of the mine and their ambition saw thousands of locals plough savings and pensions into the project once it listed on the stock market, where it fast became a retail favourite. It counted 85,000 individual investors at one point and was in the FTSE 250 from 2017 to 2019.
But the scale of funding needed became the company’s undoing. The infrastructure required is huge – including two shafts that are both a mile deep as well as a 23-mile tunnel, which is longer than the Channel Tunnel.
The plan was to dig up polyhalite from under the North York Moors National Park, then transport it underground to be processed to Teesside and shipped abroad. Raising the cash for this gargantuan construction effort proved too difficult after the Government refused to underwrite a huge funding package.
The company almost folded but was rescued by Anglo American in a cut-price £405million takeover in 2020.
The deal wiped out the investments of many retail shareholders who snapped up stock when it was booming.
Many of these were Yorkshire locals 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,’ a resident who has worked at Woodsmith told the Mail yesterday.
‘We could never see this mine being completed.
‘The amount of money wasted is horrendous.’
Cliff Weight, an adviser to shareholder advocacy group ShareSoc, said the community would feel ‘very confused’ by Anglo’s ‘mixed messages’ about the mine.
‘It’s a tragedy,’ Weight added yesterday. ‘It is hugely emotive locally – for that area this is similar to the Post Office scandal.’
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