Anglo American Woodsmith fertiliser budget moved to end 2022

Anglo American has introduced a management shake up at its Woodsmith polyhalite fertiliser project in Whitby and expects to complete design engineering, capital budget and schedule at the end of 2022.

In a statement, Anglo American said the modification will bring it up to Anglo American's safety and operating integrity standards and to optimise the value of the asset for the long term. The detailed technical review it started in mid 2020 is now largely complete.

Anglo American is also making leadership changes from January 1 with Tom McCulley, who has led the development of the Quellaveco copper project in Peru, taking over from Chris Fraser as CEO of Crop Nutrients. After 12 years of driving the project from inception, Fraser will step aside and take on a strategic projects role.

The Woodsmith team is further developing the engineering to optimise the configuration of the project, recognising the multi-decade life of the mine. Particular attention is on those aspects identified at the outset of Anglo American's ownership - namely, the sinking of the two main shafts, the development of the underground mining area, and the changes required to accommodate both increased production capacity and the more efficient and scalable mining method of using only continuous miners; such improvements will also require the installation of additional ventilation earlier in the development of the underground mining area.

Anglo American expects that these changes to the design of the mine infrastructure - which will result in a different, enhanced configuration and therefore a different construction and production ramp-up schedule - will ensure that its exacting standards are met and the full commercial value of the asset is realised.

Mark Cutifani, Chief Executive of Anglo American, said he was happy with the scale and quality of the polyhalite orebody pointing to a Q1 operating cost position and strong margins. "This is a very long-life asset and we are going to take the necessary time to get every aspect of the design right to match our long term vision and value aspirations," he said.

"We have said from the outset that we expect to make improvements and that we will execute certain elements of the construction differently and with a more conservative schedule."

In the meantime, construction of the major critical path elements of the project, principally the two main shafts and the mineral transport tunnel, is progressing, with approximately $0.7 billion of capital expected to be invested in 2022.

Beyond its crop yield and quality benefits over other bulk fertiliser products, the value of the product in the market is also expected to be enhanced by its positive environmental properties - a very low carbon footprint given minimal processing requirements, its natural ability to improve soil health, and certification for organic use.

Anglo American has also appointed Adolfo Heeren as CEO of Anglo American in Peru from January 1. He will work together with McCulley during the first half of 2022 to ensure a smooth transition from the construction and commissioning phase of Quellaveco into operations, expecting first copper production in mid-2022.

In a separate statement, Anglo American forecasts delivering 35% growth over the next decade "at an attractive 50% margin".

"We are also increasing our near term performance improvement target to $3.5 - $4.5 billion by 2023, as we accelerate the delivery of our P101 and technology programmes, while also bringing growth projects on stream. First and foremost is our Quellaveco project in Peru ... where we have also increased early copper production plans to create additional value."