Anglo American (LON:AAL) said Thursday it would take a $1.7 billion charge due higher costs and delays at its Woodsmith fertilizer project, which is being built beneath the North Yorks Moors national park in England.
The company, which acquired Woodsmith two years ago with the acquisition of British junior Sirius Minerals said it now expects first product from the mine in 2027.
By then, Anglo American would have spent about $1 billion a year on top of the $1.35 billion it has already invested developing the world’s largest known deposit of polyhalite fertilizer, totalling $6.1 billion.
Woodsmith’s previous owner estimated the project required about $3.3 billion for completion, with first production slated for 2024. Sirius had spent $1.4 billion on the project when Anglo American took over.
The mine, with an estimate productive life of more than 50 years, could become one of the world’s largest in terms of the amount of resources extracted. Woodsmith will generate an initial 13 million tonnes per year of polyhalite, a multi-nutrient fertilizer, containing four of the six key elements needed for plant growth — potassium, sulphur, magnesium and calcium.
Anglo American believes the mine could achieve such output levels in the early 2030s if demand for its product is sufficient.
“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,” CEO Executive Duncan Wanblad said in a statement.
While polyhalite is a new product to the fertilizer market, Wanblad said the company was modelling the project economics on a price of $190 per tonne, versus more than $300 per tonne for similar products on the market.
The writedown, flagged in December by chief financial officer Stephen Pearce is part of Anglo’s year-end 2022 results.
The global miner posted a full-year net profit of $4.51 billion, 47% less than $8.56 billion it earned in 2021.
It attributed the results to inflationary pressure, higher energy prices and lower production volumes for the results, which lifted production costs even as commodity prices fell.
Full-year revenues fell 15% to $35.12 billion from $41.55 billion in the previous year, below the company-provided consensus of $36.88 billion.
Anglo American kept its 2023 copper production guidance unchanged at between 840,000 and 930,000 tonnes.
