Serious doubts about future of Sirius Minerals new £3bn mine

The Sirius Minerals Woodsmith mine in North Yorkshire.

The future of Sirius Minerals' massive £3bn mine project near Whitby has been thrown into serious doubt after it failed to secure vital funding and the government failed to step in with vital support.

The company has shelved a $500m fundraiser for one of Europe’s biggest infrastructure projects, casting a shadow over plans to construct a giant fertiliser mine in North Yorkshire.

Shares in the mining firm shed over half their value, after it said it would be scaling back production at the site near Whitby and launching a strategic review. At the time of writing, the company is now valued at just £270m, compared to a value of £1.7bn in 2018.

The company said it believes its major bond offering cannot go ahead “in current market conditions” and will launch the “comprehensive” review over the next six months to assess different ways to secure the necessary funding for the project.

Sirius, the firm behind the multi-billion pound fertiliser mine and Teesside processing plant, had until the end of the month to sell £410m in bonds, which would unlock the further £2bn needed to take the project over the finish line.

Up to 1,200 jobs are at risk from the project’s failure, and staff could be laid off in coming weeks and months as work is scaled back, after the company said it had failed to secure support from the government which would’ve ensured the success of the financing.

Chris Fraser, managing director and chief executive officer of Sirius Minerals, issued a statement describing the company’s attempts to get government support for the fundraising. He said: “Following the postponement of the proposed senior secure notes offering in August, the company re-engaged with the UK government. The government has reviewed the case for the provision of the support requested to facilitate the financing of the project and has decided not to provide the support requested. The company believed this commitment would have enabled the company’s financing to be delivered as planned.”

Criticised over its lack of support for the project, a government spokesman said: “We cannot comment on commercially sensitive matters. All requests for financial support must meet necessary lending criteria. When examining any request for financing, we have to assess the potential of a project against the need to protect taxpayers’ money.”

However, Sirius, while still seeking government support, are also actively seeking a new investment partner to take a stake in the project.

Speaking to the Financial Times, Fraser said: “We made a very specific ask (to the government) in a short period of time after we postponed the bond offering in August. That didn’t work for them. Does that mean we can’t go back to them and continue a dialogue? No. But at the current time they weren’t able to provide the support we asked for. We wanted to bring the government in as that partner and help us in certain scenarios. The alternative is to bring in an industry or strategic player to take on that role.”

Meanwhile, a statement in the company’s results confirms that it will struggle to continue without securing further funding. It said: “The board of directors believes that additional financing will be secured in the coming months, however there is a risk that a successful outcome may not be reached. This therefore represents a material uncertainty that may cast significant doubt upon the group’s ability to continue as a going concern.”

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