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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 recently targeting first production in 2027, if certain conditions were met.
“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.
Those conditions include strengthening the balance sheet and securing a joint venture partner to reduce the investment that Anglo needs to make.
The impairment — 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 charge last year due to an extended schedule and a higher budget.
Woodsmith has been a controversial project for Anglo since it bought Sirius Minerals in 2020 — the vast $9bn underground mine will produce a new type of fertiliser unproven at scale on farms.
Anglo also cut the full-year forecast for De Beers, its diamond subsidiary, to a range of 23mn to 26mn carats on Thursday, down from 26mn to 29mn carats, after flagging impending production cuts last week.
However, a beat on analysts’ estimates for core earnings is set to relieve some of the pressure on Wanblad after fending off BHP’s takeover bid and unveiling its own plans to sell or spin off four divisions.
Reported core earnings 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.
