Anglo American will record a $1.7bn impairment on the North Yorkshire fertiliser mine that it saved from the brink of collapse three years ago, as the mining group announced a higher budget and extended schedule for one of the UK’s largest new mining projects in decades.
The FTSE 100 group recorded the writedown after estimating that it would spend $1bn a year to bring the Woodsmith mine into production by 2027, making it both more expensive and longer than expected when it acquired the mine.
Anglo rescued Woodsmith’s parent Sirius Minerals in 2020 for £405mn. Sirius had been struggling to raise the billions of dollars that it estimated it needed to build the mine by 2024.
Woodsmith is a complex project involving the sinking of two 1.6km shafts to access a deposit of polyhalite — a mineral that can be used as fertiliser but is not yet commercially proven — and the construction of a 37km underground tunnel to transport material to a port on Teesside.
Anglo’s chief financial officer Stephen Pearce flagged last December a potential writedown on the carrying value of Woodsmith since it planned to take longer to build the mine at a greater cost in order to process bigger volumes of material and extend the mine life.
Design capacity for the mine has been increased to 13mn tonnes a year, up from previous plans for 10mn, which Anglo could ramp up to hit in the early 2030s with a targeted mine life of 50 years.
The finalisation of the project plans came as Anglo reported that full-year earnings before interest, tax, depreciation and amortisation fell 30 per cent over the previous year to $14.5bn on revenues of $35.1bn, driven by lower production, as well as inflation and higher energy costs.