Proactive Investors - Anglo American’s decision to break itself up today has again raised a question mark over the future of the Woodsmith polyhalite mine in North Yorkshire.
In response to two approaches from mining peer BHP, the South African miner said it would sell De Beers and platinum and regroup around copper and iron ore.
Woodsmith was in the group of businesses to be retained, but Anglo said it would reduce capex to US$200 million in 2025 and nothing in 2026.
The mine has already soaked up US$7 billion in what is a colossally complex piece of engineering but if not being abandoned completely, today's tone suggests it has dropped several rungs down the priority list.
“Anglo American (JO:AGLJ) has high confidence, backed by its proven track record in project delivery, to develop the Woodsmith project, which is currently on plan and budget,” was the official line but how it fits in a business built around copper and iron ore is unclear.
One thing in its favour is that Woodsmith's prospects look much better under its current owner than if BHP had taken over.
BHP is currently developing an even larger fertiliser project, Jansen in Canada and as broker SP Angel noted:" A BHP deal would put two of the world’s largest undeveloped potash projects in the same pipeline, as BHP is currently delivering the Jansen project.
“Jansen is expected to come online at around 8.5 million tonnes of potash production a year, having cost BHP some US$10bn, and its full ramp-up is forecast up to US$15 billion.
"Woodsmith, meanwhile, is predicted to start at 5 million tonnes, with costs rising potentially to US$9 billion once it hits nameplate capacity.
“Ownership change, whilst still far from certain, would mark the latest twist in the expensive Woodsmith saga,” said SP Angel.
Reports in December suggested Anglo was looking for a partner for Woodsmith and today’s statement hints strongly that might be the preferred outcome.
Who might be prepared to come in at this stage remains to be seen.
Shares in Anglo eased 3% to 2,623p.