Billion-pound cash infusion clears path for UK potash mine
The chances of a potash mine taking shape on the Yorkshire moors just got a whole lot better, thanks to a major financing.
Sirius Minerals (LON:SXX), the company behind the North Yorkshire polyhalite project, said this past week it has secured GBP 1 billion in funding. The money to be put towards the first phase of construction was generated through new shares and convertible bonds. Getting the funds means that Sirius Minerals can start work on shaft sinking.
"This financing today fills out a lot of the front work and finances the shafts from beginning to end": Sirius Minerals Chief Executive Chris Fraser
The required approvals came in last year from the borough of Redcar & Cleveland, and the North York Moors National Park Authority (NYMNPA); the latter needed to be consulted because the mine would run underneath the North York Moors National Park. The project has attracted some controversy for that reason, but defenders of the mine say that construction will be underground and includes a 23-mile-long sub-surface conveyor belt that will carry the ore to port, in Teesside.
"This financing today fills out a lot of the front work and finances the shafts from beginning to end," chief executive Chris Fraser told the BBC, adding: "The actual first actions on the ground probably won't be until January with the highways work."
According to a project summary the company plans to sink two shafts – a production shaft and a service shaft – to access the polyhalite shelf seam. After pre-sinking, completing the 1,500-metre (4,921 feet) shafts is a five-step process that involves: drilling, blasting, mucking, a cleaning/blow-over process, and shaft lining.
Constructing the mine would take about five years and cost roughly GBP 2 billion.
The mine has moved forward quickly since Sirius Minerals in June lined up contractors for key components. The company is using Associated Mining Construction UK (AMC), known for its expertise in shaft sinking for potash projects, for the design and building of the mine, as well as for site development works.
AMC — a joint venture between Thyssen Group and Redpath Group — has worked with major potash producers such as Mosaic (NYSE:MOS) and Uralkali (LON:URALL).
The company also appointed Hochtief Murphy Joint Venture for the construction of the mineral transport system, specifically the tunnel that will link the mine with the materials handing facility.
In September Sirius announced JP Morgan (NYSEARCA:AMJ), Lloyds Bank (NYSE:LYG), Société Générale, RBS (NYSE:RBS), Export Development Canada and ING (NYSE:ING) will supply $2.6 billion in debt facilities to support the second stage of developing the mine such as tunnel boring.
Then in October, Australian mining magnate Gina Rinehart said she would invest GBP 250 million in the project.
Sirius’ mine, poised to be one of the world’s largest in terms of the amount of resources extracted, is set to generate an initial 10 million tonnes per year of polyhalite – a form of potash that is used in plant fertilizers – before it enters a second phase that will double that production to 20 million tonnes a year.