Anglo American has conducted a detailed technical review of the Woodsmith polyhalite project in the UK since mid-2020 to ensure the technical and commercial integrity of the full scope of its design. Now largely complete, the review has confirmed the findings of Anglo American’s due diligence that a number of elements of the project’s design would benefit from modification to bring it up to Anglo American’s safety and operating integrity standards and to optimise the value of the asset for the long term.
Anglo American is also making a change to the leadership of the project following its integration into Anglo American and ahead of the full project execution phase. Tom McCulley, who has led the development of the Quellaveco copper project in Peru, will take over from Chris Fraser as CEO of Crop Nutrients. After 12 years of driving the project from inception to its position today, Chris Fraser will step aside and take on a strategic projects role for Anglo American.
The Woodsmith team is further developing the engineering to optimise the configuration of the project, recognising the multi-decade life of the mine. Particular attention is on those aspects identified at the outset of Anglo American’s ownership – namely, the sinking of the two main shafts, the development of the underground mining area, and the changes required to accommodate both increased production capacity and the more efficient and scalable mining method of using only continuous miners; such improvements will also require the installation of additional ventilation earlier in the development of the underground mining area.
Anglo American expects that these changes to the design of the mine infrastructure – which will result in a different, enhanced configuration and therefore a different construction and production ramp-up schedule – will ensure that its exacting standards are met and the full commercial value of the asset is realised.
“We are very happy with the high quality and exciting potential of Woodsmith, with the scale and quality of the polyhalite orebody pointing to a Q1 operating cost position and strong margins. This is a very long-life asset and we are going to take the necessary time to get every aspect of the design right to match our long term vision and value aspirations.
“We have said from the outset that we expect to make improvements and that we will execute certain elements of the construction differently and with a more conservative schedule. We expect to have completed our design engineering, capital budget and schedule at the end of 2022, with a fully optimised value case that recognises the upside potential we see in Woodsmith, and we will then submit the full project to the Board.”
In the meantime, construction of the major critical path elements of the project, principally the two main shafts and the mineral transport tunnel, is progressing, with approximately $0.7 billion of capital expected to be invested in 2022.
Anglo American’s development of the market for its POLY4 fertiliser product continues to demonstrate the benefits of its multi-nutrient, low chloride characteristics on the full breadth of crops at commercial scale. Beyond its crop yield and quality benefits over other bulk fertiliser products, the value of the product in the market is also expected to be enhanced by its positive environmental properties – a very low carbon footprint given minimal processing requirements, its natural ability to improve soil health, and its certification for organic use.
“We are enormously grateful to Chris Fraser for his founding vision over some 12 years in bringing Woodsmith to reality – a project with sustainability principles at the core of its design and in the product itself. His dedicated leadership in progressing the project this far and integrating it into our organisation, and doing so while making considerable construction progress during the upheavals of the pandemic, also deserves enormous credit. As we move towards full project execution, it is a natural time for Chris to step into a new role and I’m pleased that we will benefit from his experience as he works with us on a number of strategic projects.
“I am delighted that Tom McCulley, currently CEO of Anglo American in Peru, who has so skilfully steered our Quellaveco copper project to a point of pre-commissioning, on time and on budget, will now lead the development of Woodsmith as CEO of our Crop Nutrients business. I am confident that Tom and his team will finalise our plans and then deliver the project we all envisage safely and with great precision.”
The changes to Tom McCulley’s and Chris Fraser’s roles are effective 1 January 2022. Anglo American has appointed Adolfo Heeren as CEO of Anglo American in Peru, effective 1 January 2022. Adolfo will work together with Tom McCulley during the first half of 2022 to ensure a smooth transition from the construction and commissioning phase of Quellaveco into operations, expecting first copper production in mid-2022.