Sirius Minerals confirms 1,200 jobs at risk if fresh funding not secured
The mining firm shelved a 500 million US dollar (£400 million) fundraiser for its fertiliser mine in the North Yorkshire Moors
Around 1,200 jobs could be lost if Sirius Minerals fails to secure funding for its work constructing a giant fertiliser mine in North Yorkshire, the company confirmed.
Sirius confirmed that the positions at its Woodsmith site on North Yorkshire Moors would be at risk if it did not secure financing by March next year.
The company cast a shadow over its plans to continue development at the potash mine after it shelved a 500 million US dollar (£400 million) fundraiser for the project.
Shares in the mining firm plummeted on Tuesday, shedding more than half of its value, after it said it would be scaling back production at the site near Whitby and launching a strategic review.
The company said it believes its major bond offering cannot go ahead “in current market conditions” and will launch the “comprehensive” review over the next six months to assess different ways to secure the necessary funding for the project.
Sirius also said that, although it has enough cash to cover the review process, it will also have to return 400 million dollars (£322 million) it raised through a bond earlier this year.
Last month, Sirius said it could run out of cash by the end of the year if it did not secure the necessary funds to unlock a 2.5 billion-dollar (£2 billion) credit facility from JP Morgan.
After failing to secure the necessary funds, the London-listed business said the UK Government rejected an appeal for one billion dollars in bonds.
The funding would have “enabled the company’s financing to be delivered as planned” for the potash project which would deliver hundreds of jobs, Sirius said.
Chris Fraser, managing director and chief operating officer of Sirius, said: “Due to the ongoing poor bond market conditions for an issuer like Sirius we have not been able to deliver our stage 2 financing plan.
“As a result, we have taken the decision to reduce the rate of development across the project in order to preserve funding to allow more time to develop alternatives and preserve the significant amount of inherent value in this world-class project.
“This is the most prudent decision to give the company the time necessary to restructure its plans to move the project forward.”
Graham Spooner, investment research analyst at The Share Centre, said: “The long-awaited news from Sirius Minerals regarding its future financing this morning will have made difficult reading for the raft of private investors who were attracted to the first major mine in England for a long time.
“With cash running out fast, investors will be fearing for the future of the mine and remain cognisant that the recent history of mining in the UK has been littered with failures.”
Shares in the company fell 55% to 4p in early trading.
Middlesbrough’s Labour MP Andy McDonald called on the Government to step in to help the project which would bring hundreds of jobs to Teesside.
He said: “This mad administration, propelling the country to economic cliff edge, seems determined to do everything they can to destroy the industrial base of Teesside.
“They’re keen enough to give tax breaks to gambling bankers but won’t lift a finger to help our industries.
“Sirius is critical to Teesside’s future and if Government stands aside as they did with the Redcar Blast Furnace they will never be forgiven.”
Ben Houchen, the Tory Tees Valley elected mayor, still believed the mine will succeed.
He said: “Clearly today’s news is disappointing, however I remain confident in the project and the huge benefits it can bring the Tees Valley and I believe the team at Sirius will be able to secure the funding they need to continue this major development.
“As a great local business Sirius has the resilience and grit to get through this.
“Make no mistake this is a unique, long-term and complex project.
“This is the biggest private investment in the north of England and any project of this type is going to have its ups and downs, but there is still a future for the mine, and it will continue.
“This is far from the end.
“I’m in daily contact with Chris Fraser, Sirius’ managing director, and remain confident that the truly transformational benefits this project can deliver for our region can and will be delivered.
“I will continue to do all I can to support this once in a generation development.”
Downing Street would not be drawn on the specific case, but the Prime Minister’s official spokesman said: “When examining any request for financing, we have to assess the potential of a project against the need to protect taxpayers’ money.”
The spokesman insisted the Government remained committed to the so-called Northern Powerhouse agenda, adding: “We have made and continue to make very significant investment in the Northern Powerhouse project.”
Sorry, we are not accepting comments on this article.