Anglo American Plc reported this week progress at the Woodsmith polyhalite project in the northeast of England “is solid.” The group acquired the project and its developer, Sirius Minerals Plc, in March 2020 for a cash consideration of US$0.5 billion (GM March 20, 2020). Anglo also took on borrowing and lease liabilities, which took the total impact of the acquisition on the group’s net debt to US$0.7 billion on the date of acquisition.

The tunnel to house the underground conveyor belt to transport the polyhalite ore from the mine to a materials handling facility at the port of Teeside has now been driven almost 13 km of its 37 km target, the group reported. The materials handling facility will granulate the polyhalite to produce the fertilizer product known as Poly4 before it is exported from a dedicated port.

At the mine head, some 5 km south of Whitby, the first shaft-boring machine has been assembled within the service shaft and is being commissioned, while good progress is being made on the production shaft, Anglo said.

It said the impact of COVID-19 on the project’s development has been limited to date due to the successful implementation of appropriate health measures.

The detailed technical review of Woodsmith’s development plan initiated following the acquisition, with the objectives of optimizing the project timeline and design and aligning it with Anglo’s technical and other standards, is nearing completion. The group said the review confirms the quality of the overall project design and the development approach within the parameters the group set.

Anglo’s schedule for a mid-2021 board update to the market on Woodsmith, when it will present final capital and project schedule estimates, remains on track (GM Dec. 18, 2020).

Ahead of that update, it said it is refining two aspects of the project that it had allowed for in its investment case.

“We will likely bring forward the investment in additional ventilation to increase early production flexibility and we are working through the detailed scheduling of the two shaft installations,” Anglo American CEO Mark Cutifani told analysts at the group’s FY2020 earnings call.

Anglo spent $0.3 billion at the Woodsmith project in 2020, and – as per the group’s guidance to investors in December – has committed to spend around US$0.5 billion this year (GM Dec.18, 2020). The 2021 figure is some US$0.2 billion higher than originally planned at the completion of the takeover.

The group said this investment reflects the good progress made in 2020 since the acquisition and the focus on “certain critical-path items” in 2021, including the continuation of the conveyor tunnel and site preparation for the processing facility, in addition to the ongoing shaft-sinking program.

Woodsmith had an approved project capex of US$3.3 billion prior to the Anglo takeover, subject to optimization of development timeline and design post acquisition.

Like Sirius, Anglo is targeting to ultimately produce 10 million mt/y of Poly4 – its potential marketed polyhalite product – at Woodsmith, which it said would add around 5 percent of copper equivalent production to Anglo’s production when the operation is fully ramped up to that 10 million mt production level.

The group said it has offtake arrangements in place – many of them secured by the former owner of the project – that accommodate production at Woodsmith “in excess of 10 million mt.”

“Many of these agreements have price levels benchmarked against the market prices of the underlying four key nutrients within Poly4, and have been set up on a take-or-pay basis,” said Anglo.

The group’s ongoing focus of the market development activities is now around developing and implementing detailed sales and marketing strategies for each region and supporting customers with their own market development activities in order to promote Poly4 to end-users of the product, the group said.

The Woodsmith project is part of Anglo American’s Crop Nutrition business division.