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To spend about $1 bln a year in investment
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Expects Woodsmith first production in 2027
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Reports 30% fall in core profits in 2022
(Adds analyst, updates shares)
By Clara Denina and Muhammed Husain
LONDON, Feb 23 (Reuters) - Anglo American Plc on
Thursday announced a $1.7 billion writedown on its project to
produce fertiliser nutrients in Britain, as it set out its
budget for the mine and flagged a later-than-expected start to
operations.
The group estimated it would spend around $1 billion a year
to bring the Woodsmith project in north-east England to
production by 2027. The mine has the world's largest known
deposit of polyhalite, a multi-nutrient fertiliser.
The London-listed miner bought Woodsmith in Britain's North
York Moors National Park for 405 million pounds ($488.35
million) in 2020 and said on Thursday it has spent $1.35 billion
so far expanding it.
It now expects first production from 2027, reaching around 5
million tonnes per annum by 2030, compared to an estimate from
its previous owner of 2024 with output of 10 million tonnes a
year in the initial phase.
"Depending on how we shape and develop the markets from
there, we will expand it from the 5 million tonnes to the 13
million tonnes," Chief Executive Duncan Wanblad told reporters.
"We have taken a writedown on it now because the timeline
and budget have been extended... but absolutely be in no doubt
that we are setting Woodsmith up to generate significant
cashflows for many, many decades, we'll be building it out now
until 2027," Wanblad added.
Shares in the miner fell 2.3% by 1002 GMT, underperforming
peers.
NEW PRODUCT
Prices of crop nutrients have soared since Western sanctions
were imposed on top producer Russia over the invasion of
Ukraine.
The world's largest miner BHP Group has also
entered the potash fertiliser market with its Jansen project in
Canada, betting on rising demand for the commodity over the next
few decades.
Polyhalite, a naturally-occurring mineral containing
nutrients that ensure plant growth, is currently produced in low
quantities.
"The Woodsmith project writedown is unhelpful as the
acquisition of this project via Anglo's takeover of Sirius
Minerals was controversial at the time, in part due to the fact
that a market for the polyhalite product had not yet been
clearly established," said Christopher LaFemina, equity analyst
at Jefferies.
"Anglo had not expected the challenges it has
encountered in designing this project. It is important that the
company gets this project right from this point forward."
The global miner, which also produces copper, iron ore, precious metals and diamonds, joined most of its rivals in reporting lower full-year earnings and shareholder dividend, hit by lower commodity prices and higher mining costs.
It declared a full-year dividend of $1.98 per share, down from $4.99 per share in 2021 and a 30% fall in underlying core profit for 2022 to $14.5 billion, slightly above an average forecast of $14.35 billion from 14 analysts compiled by research firm Vuma. ($1 = 0.8293 pounds) (Reporting by Clara Denina; editing by Emelia Sithole-Matarise and Jason Neely)
