September 17 2019 @ 15:42 by Steven Hugill
A potash firm will scale back work on a 4000-job fertiliser mine project spanning North Yorkshire and Teesside following the shelving of a £400 million fundraiser.
Sirius Minerals has admitted it will “reduce the rate of development” on its polyhalite scheme after tough market conditions forced bosses to cancel a bond offering.
The firm, which also revealed the Government declined its approaches for support, is now carrying out a six-month finance review “to restructure plans to move the project forward.”
Sirius intends to extract the fertiliser polyhalite – reputed for encouraging strong crop growth – from a mine on the outskirts of Whitby, North Yorkshire, before moving it underground to a storage base at Wilton, near Redcar, from where it will be delivered to global customers via a new harbour.
Production has long been expected to begin in 2021, with Sirius saying it expects the development to create 1000 direct jobs and support another 3000 in the construction phase and eventual supply chain.
However, Chris Fraser, Sirius’ managing director and chief executive, said the business must now reassess its financial plans to ensure it meets its ambitions.
He also admitted it will have to return £322 million raised through a bond earlier this year, though he moved to assuage concerns over its financial state, saying its £180 million unrestricted cash reserves will provide cover during the review process.
He said: “Due to the ongoing poor bond market conditions for an issuer like Sirius, we have not been able to deliver our stage two financing plan.
“As a result, we have taken the decision to reduce the rate of development across the project in order to preserve funding to allow more time to develop alternatives.
“The company will now conduct a comprehensive strategic review to assess and incorporate optimisations to the project development plan.”
Anna Turley, MP for Redcar, said the Government’s decision not to back Sirius amounted to a failure on its part.
“That the Government are refusing to step in and secure this enormous project is an absolute disgrace,” she said.
“It seems no finance was being sought from Government immediately – just security in 18 months’ time for Sirius to be able to issue their bonds now.”