Sirius delays application for $2.7bn potash mine in English national park
Shares in Sirius Minerals (LON:SXX), the miner aiming to extract potash in an English national park, have been trading low this week after the potash mine developer said it would not be submitting final documentation for its $2.7 billion (£1.7bn) York project by the end of the month.
Instead, the firm has decided to postpone the application until the end of September, a delay of two months.
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.
According to the company, the mine will employ about 1,800 workers during construction and generate 1,000 permanent jobs once opened.
The York Potash project, posed to be one of the world’s largest deposits of the commodity, has faced controversy since it was unveiled in January 2011.
The UK Ministry of Defence (MOD) has expressed fears over the possibility that the mine could interfere with its missile early warning system. There are also other concerns, including subsidence, vibration, frequency interference and the impact on water reservoirs in and close to the North York Moors National Park.
The company has been working with the park authority to agree an informal pre-application "Planning Position Statement", where the benefits of the mine have been pegged against the expected "adverse impacts on the National Park," especially during construction.
And while authorities acknowledge the economic benefits of the proposed mine can be described as "significant", they are still looking for evidence that they can be delivered, Interactive Investors reported.
“Based on the comments by the National Park authorities, it would appear that the company has still got quite a lot to demonstrate before changing the trade-off in their favour,” SP Angel said last week in a note to clients. “With the UK economy now in a stronger position, we wonder if the case for job creation has been pushed back.”
Current potash market conditions are not 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 about $300 a tonne. Producers such as BHP need prices as close as $500 per tonne as possible, so they can cover construction costs.
Shares in Sirius closed down 2.13% Tuesday to 11.50 p.
Image courtesy of North York Moors.