Construction of giant York Potash mine to begin next year
London-listed Sirius Minerals (LON:SXX) has been granted the final permits to build its massive potash project at the North York Moors National Park, one of the first new mines in the UK in the last 45 years.
The mine, poised to be one of the world’s largest in terms of the amount of resources extracted, is set to generate around an initial 10 million tonnes per year of polyhalite, used as a fertilizer, before it enters a second phase that will double that production to 20 million tonnes a year.
The $3.15 billion project faced several challenges since first unveiled in January 2011, particularly because the application to extract billions of tonnes of minerals from a national park was the biggest ever received by the country’s authorities.
But Sirius managed to get approvals and it is currently finalizing the definitive feasibility study for the project, which it hopes to complete before the end of the year. The company is planning on outlining its financing plans and to start first phase development at the project in the first quarter of 2016.
The mine is expected to create about 1,800 jobs during construction and 1,000 permanent positions once opened.
Sirius had originally expected to begin production in late 2016, with initial output of 5 million tonnes per year and had signed a few future supply agreements. The current development schedule, however, points at 2018 as the most likely time for production to begin.
Current potash market conditions don’t seem optimal for new players. The already oversupplied sector has seen several other major developments, the biggest being BHP Billiton’s (ASX:BHP) Jansen mine with its 5.3bn tonnes of measured resources and 1.3bn tonnes of inferred potash, going back to the drawing board.
The fertilizer ingredient is currently trading close to $300 a tonne. Producers such as BHP need prices as close as $500 per tonne as possible, so they can cover construction costs.
Image courtesy of North York Moors.