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 Sunday Telegraph - Money & Business - - Business -

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

Project in­fra­struc­ture

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