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Anglo American has announced a further $1.6bn writedown on its North Yorkshire fertiliser mine, after drastically slowing its development as part of a turnaround strategy announced in May.
The impairment on Woodsmith at the embattled FTSE 100 miner, which fought off a £39bn takeover bid from rival BHP earlier this year, contributed to a $700mn loss in the first half of the year.
Chief executive Duncan Wanblad said on a media call that its flagship growth project could reach first production around 2030, after previously targeting 2027, if the balance sheet is strengthened and a joint venture partner is found.
“To the extent that all of those [prerequisite criteria] come to pass in a couple of years’ time, then there’s a good chance that around 2030 is first production,” he said.
The writedown comes as Anglo starts to implement a sweeping 18-month overhaul that involves shedding four units, including its trophy diamond subsidiary De Beers, and slimming itself down to a copper, iron ore and fertiliser producer.
The charge — which was signalled by Anglo last week — is only the latest for Woodsmith, the fertiliser project it saved from collapse four years ago, for which Anglo booked a $1.7bn impairment last year due to an extended schedule and a higher budget.
Woodsmith has been a controversial project for Anglo since it rescued the project’s parent Sirius Minerals in 2020, which had been struggling to raise the billions of dollars needed to build it by 2024. The vast $9bn underground mine will produce a new type of organic fertiliser unproven at scale on farms.
Anglo also on Thursday cut the full-year output forecast for De Beers to a range of 23mn to 26mn carats, a reduction of 3mn carats, after flagging impending production cuts last week.
Anglo suffered a large setback at the end of last month from an explosion and fire at Grosvenor, one of its large metallurgical coal mines, that has complicated the sale of its coal unit, which was seen as Anglo’s most immediately achievable divestiture.
Wanblad said Anglo still wanted to sell all of the coal assets as a package including Grosvenor, and expected a deal to be wrapped up by the end of this year or early next year despite acknowledging that the mine damage — and therefore the potential valuation impact — was still unknown.
However, a beat on analysts’ estimates for core earnings is set to relieve some of the pressure on the chief executive, after fending off BHP’s takeover bid and unveiling Anglo’s plans to sell or spin off four divisions.
Reported earnings before interest, taxes, depreciation and amortisation were down 3 per cent to $5bn in the first six months of the year, as cost reductions offset falls in prices of Anglo’s key commodities such as iron ore and platinum metals.
“I am very encouraged by a strong operational performance that delivered steady volumes and a 4 per cent improvement in unit costs,” Wanblad said.
Seventy per cent of the earnings came from copper and iron ore, the two divisions Anglo will keep in addition to Woodsmith as it divests metallurgical coal, De Beers diamonds, platinum metals and nickel.
“All things considered, this appears to be a positive set of results from Anglo,” said Christopher LaFemina, an analyst at Jefferies.