ANGLO American defended its decision to invest in the Woodsmith fertiliser project after announcing earlier today it would spend an additional year scoping the project’s finance as well as building an improved picture of its development, including engineering.
It also announced it would install new management to drive Woodsmith, appointing one of its best project developers, Tom McCulley. McCulley, who previously led the development of Anglo’s $5.3bn Quellaveco mine in Peru, replaces Chris Fraser as CEO of Crop Nutrients who will take on a strategic projects role in Anglo.
“Nothing is keeping me up at night; I’m more excited than worried,” said Anglo American CEO, Mark Cutifani, when questioned by analysts about the project during a company update presentation. “This is not now the project we bought,” he acknowledged before adding: “It is morphing into a Anglo project”.
Anglo bought Woodsmith for £405m from Sirius Minerals in 2020 and said at the time it would take two years to assess the project. Woodsmith contains a specialised grade of crop fertiliser called polyhalite. The investment represented a departure for Anglo which is renowned for mining platinum, diamonds and copper.
Cutifani also acknowledged that Anglo could seek an equity partner for Woodsmith just as it had introduced Mitsubishi into Quellaveco – due to be commissioned on time and budget mid-2022. Before contemplating selling shares in the project, Anglo would continue to develop Woodsmith so that “… we have added enough value in the eyes of a potential shareholder”, said Cutifani.
Some $700m would be spent next year on Woodsmith in order to sink two shafts and construct a mineral transport tunnel.
Cutifani said that while there wouldn’t be a significant leap in Woodsmith’s total project capital expenditure, it would be developed differently. The plan is to phase in production in order to recoup revenue on a pathway towards larger than anticipated nameplate capacity.
However, the first step was to build in greater detail into the engineering plans and to dispense with the “lump sum turnkey” approach adopted by Sirius Minerals which handed too much control to contractors, said Cutifani. A product would also be developed that better matched future market demand, he said.