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Could one of Sirius Minerals’ main rivals be about to throw the towel in?

Should Sirius Minerals successfully complete its Stage 2 financing as expected, Shore Capital reckons ICL could look to exit its own polyhalite operations in North Yorkshire

woodsmith mine
ICL’s Boulby mine is right next to Sirius’ own polyhalite project, Woodsmith

One of Sirius Minerals PLC’s (LON:SXX) main rivals could soon ‘throw in the towel’ at its own polyhalite project, according to City broker Shore Capital.

ICL runs the Boulby mine in North Yorkshire, which sits within a stone’s throw of Sirius’ Woodsmith project.

READ: Sirius Minerals shares tipped to double

Sirius is currently in the process of raising the final £2.6-£2.7bn (US$3.4-US$3.6bn) it needs to complete development of the mine, which is scheduled to achieve first production by the end of 2021.

Citing comments made by ICL bosses at a conference last week, Shore Capital analyst Yuen Low reckons the company will look to move out of the polyhalite space should Sirius be successful in raising its Stage 2 financing, as he firmly expects it will.

“In a conference last week, CFO Kobi Altman admitted that ICL is currently in a ‘wait and see mode’ at Boulby and would ‘probably try to exit’ polyhalite if Sirius is successful (as we expect it will be) in raising its Stage 2 financing,” read a note to clients.

“The reason is that ICL’s stated strategy is to be a (cost) leader in all its key business areas, whereas if Sirius is successful, ‘[ICL] will not be able to be [a leader]’.”

Berenberg cuts price target

Low added: “Interestingly, earlier this month, at ICL’s Q3 2018 financials, Mr Altman had noted that ‘the only business that [ICL] have that is not a world leader at this point in time’ is the Specialty Fertilizers business, ‘and so probably, any significant M&A will have to come from that division’.”

Sirius shares were down 1.7% in late-morning trading on Thursday, weighed down by a price target cut from Berenberg analysts.

The venerable German bank trimmed its target by 10p to 40p, which is still comfortably above the current price.

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