Moors prove fertile ground for those who dare to dig
In the single biggest investment in the northern powerhouse, Britain’s deepest mine is being created, reports Jon Yeomans
The Wilton International chemical estate on Teesside is a windswept expanse of scrubland and giant industrial hulks. Power stations rub up against a Tesco distribution centre and a hi-tech ethylene cracker, a warren of twisted metal towers around a squat cooling tower. High fences, CCTV cameras and checkpoints are reminders that some of the UK’S most important oil and gas lines come ashore here.
In a matter of weeks, Wilton’s newest tenant hopes to break ground on one of the biggest projects Teesside has seen in years. Sirius Minerals, the ambitious fertiliser producer of the FTSE 250, wants to transport its product 23 miles underground from its mine in Yorkshire to process and ship it from new facilities at Teesside.
Engineers will soon begin digging the entrance of the tunnel at Wilton, from where it will be transported just a few hundred yards to the mouth of the Tees. Sirius wants to build its own loading dock at Teesside. Before then, however, it hopes to make use of the dock that shipped metal from the steelworks at Redcar, which closed in 2015. The abandoned steelworks, at the tip of the Wilton site, casts a long shadow over the area.
Sirius has proved many of its doubters wrong. But with work on its mine set to begin in earnest, and a second round of funding sought this year, bigger challenges lie ahead. Can it finance and build one of the biggest engineering projects this country has attempted in decades? And can it actually sell the potash-based product it seeks to mine from the depths of the North York Moors?
“It’s the single biggest private investment in the ‘northern powerhouse’ and indeed all of Europe,” says Ben Houchen, the Tory mayor of Tees Valley. Houchen is keen to let people know that “the Teesside economy has been better than people think it’s been”, with unemployment hitting a record low. But he acknowledges that many of the former steelworkers are now in lower paid jobs. “[Sirius will create] manufacturing jobs we’ve not seen in the area for many decades.”
Will Woods agrees that the project will be just as important for Teesside as Yorkshire. Once Sirius has built its mine – it has an end date of 2021 in mind – it will concentrate on shipping as much of its fertiliser through Teesport as possible. Woods came on board in 2011 as the right-hand man of Chris Fraser, the Australian former banker and chief executive of Sirius who has pushed this project forward with sheer bloody-mindedness.
In the early days, Woods and Fraser “went from pub to pub”, holding meetings with locals to convince them of the merits of digging a vast cavern under the national park. The charm offensive resulted in them locking down hundreds of mineral rights; Sirius is already paying out “a few million” each year to home owners. Yet the battle for planning permission was even harder. “It’s been a right roller-coaster – but we’re building something pretty special,” says Woods. For him, the mission has a personal element, as his father was one of the geologists who identified the potash lode. The four-year planning battle was won 8-7 on the day in 2015. The council had done its due diligence, commissioning a series of reports that scrutinised everything from the mine’s environmental impact to the saleability of its potash – or, strictly speaking, its polyhalite, a naturally occurring fertiliser that also includes potassium, calcium, magnesium and sulphur. Sirius has been at pains to comply with all environmental demands, planting trees and promising to build an artificial island for migrating birds.
Sirius’s approach may one day be regarded as a textbook example of how to win hearts and minds. Its charitable foundation, with an annual budget of £14m, has been busy fixing community hall roofs and paying grants to schools. Fraser’s well-honed pitch has gone down so well that many locals are now investors. But this only adds to the pressure on the Australian’s shoulders. “Nothing’s been easy,” says Fraser. “The hardest bit was the planning. So much was out of our control. You had to hold your breath and hope.” After so many years defending his project, Fraser has a guarded quality; wondering, perhaps, how a post-banking career developing global mining projects turned into an extended stay in Yorkshire. “It became all-encompassing,” he explains.
After winning planning permission, Fraser’s other big success to date is securing £1.2bn in stage-one funding in 2016. This included £245m from Australian mining billionaire Gina Rinehart. His next job is to win £2bn in loans from its banks. To do this, he needs to sign up a few more customers for Sirius’s polyhalite. It has 4.4m tons in offtake agreements already, but would like closer to 6-7m of its projected 10m per annum output. Fraser also wants the UK Treasury to sign a debt guarantee facility. Small wonder if, by his own concession, he cuts meetings short when he feels people are wasting his time. At the Woodsmith mine, the funding raised so far is paying for the preparation of the two shafts that will be sunk to a depth of 1,500m (4,921ft). The site is in one of the highest parts of the national park, with just 11 houses in the vicinity.
A protective wall of trees and earth will soon blot out the view of Whitby and the sea, 12 miles distant. Locals were more concerned about the impact of traffic, rather than long-term environmental damage, Graham Clarke, operational director, insists.
Clarke is the man with the job of building Woodsmith. It will be the deepest mine in the UK, and second deepest in Europe. When operational, around 100 people will work underground in 40-degree heat cutting and blasting the rock-hard polyhalite. The underground conveyor belt to Teesside will travel at a depth of 360m (1,181ft), through a tunnel roughly the size of a train carriage. “We’re always pushing boundaries,” says Clarke. “There’s a huge heritage of mining here. To be part of putting mining back on the map, I couldn’t not do it.” A former boss at the nearby Boulby mine, Clarke can claim to be one of the few people to have actually mined polyhalite. Boulby was established in the Seventies to mine potash near the surface but at Clarke’s instigation switched its focus to polyhalite. Aside from Woodsmith, which sits on a deposit so vast it will have at least 50 years of mine life, there are no other polyhalite producers in the world – which makes it something of an unknown quantity.
A 2015 report warned that Sirius would “need to be highly competitive on price in order to sell the volume” it needs to, and to convince farmers to bet on polyhalite. “Using polyhalite will require investment by most users in more storage or handling equipment,” analysts at Fertecon found. “[It] is unlikely to completely substitute another product.”
JT Starzecki, Sirius’s marketing manager, has the job of travelling the world and convincing farmers that they should switch to its natural fertiliser blend. He has a raft of agronomic data commissioned by Sirius behind him. “Every farm in the world uses a subset of the minerals in polyhalite,” says Starzecki. Farmers are “asking for alternatives and recognising the value of secondary nutrients”, he adds.
The global market for potash is rising and the world is only going to need more food. “We just have to understand how farmers decide what to buy and when they buy it and where they get their recommendations from,” he says. Sirius’s case rests on a claim that it will have the lowest costs in the industry once it gets up and running. It is the type of project, Clarke suggests, the UK needs. “As a country we have to take advantage of these opportunities,” he says. Sirius believes it can knock 7pc off the UK’S trade deficit by making around £2.5bn in exports a year. With its promise of 2,500 jobs and £500m in annual taxes, it’s small wonder Teesside Mayor Houchen is lobbying hard for Sirius: “The Government should be giving them their requested Treasury guarantee. It’s a more than credible project. And it’s good for our area.”
‘There’s a huge heritage of mining here. To be part of putting mining back on the map, I couldn’t not do it’
Sirius has secured
£1.2bn in stage-one financing that will pay for the sinking of the shafts at the North York Moors site, as Britain’s biggest mine starts to take shape, with the capacity to provide 50 years’ worth of polyhalite