Anglo American PLC (LSE:AAL) has taken a US$1.7bn write-down to the value of the Woodsmith mineral fertiliser mine in North Yorkshire, which it bought from Sirius Minerals three years ago.
The impairment to a carrying value of US$0.9mln was due to development taking longer and the budget being larger than expected, the FTSE 100-listed miner said, the sort of issues with which Sirius shareholders were very familiar.
These “significant changes”, it said were “designed to deliver maximum returns” over a longer life of the mine.
A date for first product from the mine, which is beneath the Yorkshire moors national park, has been pencilled in for 2027 with an annual capital investment of “around US$1.0bn”.
“Significant changes have been made to the scope, design and approach to execution of the project,” Anglo said in an update alongside its annual results.
“These changes will allow future optionality for a larger operating footprint, to be delivered in a phased approach in step with market development, and optimise the value of the asset for the long term.
“These changes are expected to result in an extended project and ramp-up schedule, with first product to market expected to be available in 2027, and higher capital expenditure than envisaged at the time of acquisition," the firm added.
Activities at the deep shafts have “progressed well” after contracts were awarded, with US$522mln of capital expenditure spent on these “critical path” activities last year.
The service shaft is now more than 360 metres deep, with the mineral transport tunnel now longer than 21 kilometres and “progressing at rates not seen since the start of the tunnelling activities” – though still only just past half as long as it needs to be to reach its destination.
An increased US$0.8bn has been allocated for Woodsmith capex in 2023, out of a total of US$6bn-US6.5bn set aside for capex in the year.
The revised plan is continuing to develop, the mining giant said, but it will need additional studies to “optimise development, materials transport and handling facilities” as part of its plan for a phased approach.
Overall, Anglo reported underlying EBITDA down 30% to US$14.5bn, with net debt increasing to US$6.9bn from US$3.8bn.