Giant Yorkshire mine faces uncertain future

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Sirius Minerals

The future of a huge potash mine in North Yorkshire has been thrown into doubt after the company behind the project cancelled plans to raise $500m (£403m) through a bond sale.

Sirius Minerals blamed “market conditions”, including Brexit and lack of government support for the decision.

It will now undergo a six-month review of four different options for a new financing plan to resume the project.

The company’s share price halved in reaction to the news.

Sirius had already paused the bond issue last month, blaming “market conditions”.

The project is set to be the world’s largest mine for polyhalite, a naturally occurring fertiliser which is used in agriculture. The mine is due to open in 2021 and create more than 1,000 jobs.

The plans include a 23-mile (37km) tunnel to transport minerals to a processing plant near the former Redcar steelworks.

Different parts of the work will be slowed up to maintain cash flow while the strategic review takes place.

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Sirius Minerals

Image caption

Minerals would be transported underground to a processing plant on Teesside

Announcing the changes, Sirius managing director Chris Fraser said: “This is the most prudent decision to give the company the time necessary to restructure its plans to move the project forward.

“The process will incorporate feedback from prospective credit providers around the risks associated with construction and will include seeking a major strategic partner for the project.”

The company said it had asked the government for support but its request had been turned down.

Sirius added that it believed that “this commitment would have enabled the company’s financing to be delivered as planned”.

The prime minister’s official spokesman said: “When examining any request for financing, we have to assess the potential of a project against the need to protect taxpayers’ money.”

He added: “We have made and continue to make very significant investment in the Northern Powerhouse project.”

The MP for Redcar, Labour’s Anna Turley, said it was “devastating news”.

She added on Twitter: “That the government are refusing to step in and secure this enormous project is an absolute disgrace.

“This government owes everyone involved an apology. It’s not too late to change their minds and step in to save this huge project and the jobs and livelihoods that rely on it.”

Middlesbrough’s MP, Labour’s Andy McDonald, tweeted: “Sirius is critical to Teesside’s future and if government stands aside as they did with the Redcar Blast Furnace they will never be forgiven.”

Robert Goodwill, the Conservative MP for Scarborough and Whitby, said it would be “unprecedented” for the government to step in.

“I hope they will be successful in finding a partner, I think that is the best way forward,” he said. “The government looked at it and said it wasn’t the sort of thing it could do, it is a commercial project and if it is a viable project then other companies will back it.”

‘Not game over’

Tees Valley Mayor Ben Houchen, said there was still hope the problems could be overcome.

“I’m in daily contact with Chris Fraser and remain confident that the truly transformational benefits this project can deliver for our region can and will be delivered,” he said.

Russ Mould, from investment platform AJ Bell, said: “This is terrible news for a very large number of retail investors who had put their faith in the company.

“Many of these shareholders live close to the mine and invested as a show of support in a project that had the potential to greatly improve the local economy.”

He added: “Although the share price has taken a beating on today’s news, it isn’t game over for Sirius and its shareholders. The miner has a few options to try and salvage the project.”