Details of huge potash mine unveiled as initial cost increases

Chris Fraser yesterday unveiled a long-awaited feasibility study for the York Potash Project, located south of Whitby, which will cost £2.4bn to reach initial production - £700m more than the previous estimate.

The project will create more than 1,000 jobs when it reaches full production and a further 1,500 jobs indirectly, the company said. The mine will make a yearly contribution to UK GDP of £2.3bn.

A Sirius spokesman said its previous capital cost figure of £1.7bn was a ‘very early’ estimate, dating back to 2012, which did not include the project’s mineral transport system or any contingency. He added that the current pricing was broadly in line with more recent guidance provided to the market.

Sirius said its £2.4bn investment would help to deliver a company with a value of £19bn.

At full production, the annual contribution to UK GDP would be £2.3bn, with £2.5bn of exports helping to decrease the 2015 balance of trade deficit by seven per cent.

Business leaders said it was the biggest private investment project in the North of England “by a billion miles”.

But it is hugely controversial and environmentalists and organisations including the Campaign to Protect Rural England (CPRE) and the National Trust campaigned against it.

The York Potash Project will see a 4,921ft (1,500m) mine sunk beneath the park, which will tunnel outwards and pump the mineral polyhalite - a speciality fertiliser - underground around 30 miles north to Teesside, where it will be processed.

It is expected to go into production in 2020/21.

Mr Fraser said: “The business that is created from this project will sit as a world leader in the fertiliser industry based here in the UK.

“It is expected to have a low operating cost structure, high margins and a very long asset life in one of the most business-friendly, stable and dynamic economies in the world.

“In delivering this project we can create thousands of jobs in North Yorkshire and Teesside, deliver billions of pounds of investment to the UK and put the country at the forefront of the multi-nutrient fertiliser industry.”

Yesterday’s definitive feasibility study for the mine follows the company winning planning permission for the project in July after years of arguments over whether it should be allowed in one of the UK’s most protected landscapes.

Sirius said that it had £25m in the bank and now needs to raise £1.1bn in debt and equity to start the first phase of construction.

Mr Fraser added: “Work is advancing with our financing partners globally to bring together the pieces of the initial financing of this ​p​roject.

“This process is expected to take a number of months but certain parts of the early construction activity, such as highways upgrades, are commencing soon to facilitate an efficient start of the ​p​roject.”