Anglo American plc said in a Feb. 22 earnings statement that it continued to make good progress in 2023 on the core infrastructure of its Woodsmith polyhalite project in North Yorkshire, in northeast England, and is working hard to identify “the right partner, structure, and opportunity” to help share the costs of the giant project.
The company in December was reported to be looking for a potential investment partner or partners to share the costs of the project, which some market watchers have put at around $9 billion (GM Jan. 5 p. 1). Anglo has not disclosed a total capital cost figure for Woodsmith. It also took a $1.7 billion write-down on the project in FY2022 (GM Feb. 24, 2023).
Anglo CEO Duncan Wanblad told analysts and investors at a company investor update presentation on Dec. 8 that the partnership thinking was not new and the company “continues at pace to find a partner.”
The company appears to be waiting for the completion of ongoing studies targeted at enhancing the project’s configuration to allow a higher production capacity and more efficient, scalable mining methods over time before it makes a final investment decision.
Wanblad said the completion of the studies and the Full Notice to Proceed (FNTP) Board decision should put Anglo in “a strong position to maximize the value to syndication.”
As previously reported, Anglo expects to submit the Woodsmith project for a Board approval decision on the FNTP in the first half of 2025. Approval is expected to be for a 5 million mt/y operation, but also still defining a clear pathway to 13 million mt/y (GM Feb. 24, 2023). First product is still expected to be in 2027.
Anglo said it has approved a capital expenditure of $0.9 billion for Woodsmith in FY2024, the bulk of which will continue to be invested on shaft sinking and tunnel boring activities. The $0.9 billion capex for FY2024 is a big chunk of the total company-wide guided capex of $1.2 billion for growth projects for FY2024.
The company expects the capital investment for the Woodsmith project to be around $1 billion for the next few years, which is a step up from the $0.641 billion spent last year.
Anglo reported that the service shaft at Woodsmith is now about 745 meters deep, having reached the targeted depth for 2023, while the production shaft is now at a depth of about 510 meters. Excavation of the three shallow shafts that will provide both ventilation and additional access to the Mineral Transport System (MTS) is complete, while the MTS tunnel has now reached about 27.5 kilometers of the total 37 km length.
Anglo’s net profits plunged by 94% in 2023, to $283 million from $4.51 billion in 2022, on weaker metals and diamond prices. Underlying earnings before interest, taxes, and other items (EBITDA) fell to $9.96 billion from $14.5 billion, in line with analysts’ expectations of $9.95 billion.
The dividend was cut to $1.2 billion in total, or $0.96 per share, down from $2.4 billion, or $1.98, in 2022, on the back of Anglo’s weaker earnings. Wanblad said the group was adopting a “value over volume mindset” to improve returns. “We are systematically reviewing our assets and will take further actions as needed to enhance their competitiveness,” he said.
Anglo’s cut to guidance in December led to the company’s worst one-day share price since the 2008 financial crisis. The company’s market value remains 44% lower than it was in February last year, leading to speculation that a takeover bid, or activist investors seeking to break up the company, could emerge.