The mining company Anglo American could rescue plans to dig the UK’s first deep mine in 40 years under the North York Moors through a £386m takeover bid for Sirius Minerals.
The businesses are in advanced talks over a bid that would save Sirius from collapse after the struggling fertiliser miner failed to raise funds for its Yorkshire mine project.
Under the terms of Anglo’s takeover bid, it would offer 5.5p a share to Sirius shareholders to value the company at £386m, or one-third more than its market value at close on Tuesday.
The company’s share price has plummeted in recent years as it struggled to fund plans to extract a potent fertiliser called polyhalite, or Poly4. Sirius was worth 37p a share in August 2018 but was trading at just over 4p a share before the approach emerged. On Wednesday shares in the business climbed by more than a third to match the offer price.
Sirius has already raised $1.2bn (£920m) to develop the Woodsmith mine but needs a further $3.8bn to turn the project into the world’s biggest producer of polyhalite.
The deal would reignite Sirius’s plans to complete the giant potash mine, which was put in doubt last year after the company abandoned hopes of raising £400m after failing to find a strategic investor or win government support for the project.
A statement from Anglo said it had identified the Woodsmith Mine project as being of potential interest “some time ago” due to the quality of the project in terms of scale, resources and costs.
The takeover would mark a return to fertiliser mining for Anglo, which has owned phosphate assets but in recent years has focused on mining copper, iron ore, diamonds and platinum.
Anglo said the potash mine had the potential to fit well with its current strategy and would help provide certainty to Sirius shareholders, which include about 85,000 retail investors, as well as employees and customers. However, many retail stockholders face heavy losses on their investment.
Sirius employs about 1,200 staff and estimates the mine would support about 2,500 high-earning jobs in the area once up and running. It would also benefit hundreds of local people who bought shares in the company at an early stage.
Sirius estimates Britain’s first deep mine in a generation could deliver £100bn of economic benefits to the UK over 50 years.
The project aims to tap a giant deposit of polyhalite that lies beneath the national park on the North York Moors via two mineshafts drilled just under a mile (1.5km) into the ground. A 23-mile underground conveyor belt would then be built to transport the mineral from the Yorkshire mine to Teesside for export.
Sirius has agreements in place with potential customers to buy up to 13.3m tonnes of polyhalite a year, over five to 10 years, and claims the global market for it is more than 30 times that size.
A statement from Sirius said that subject to successful talks, the board expected to be able to recommend a firm offer from Anglo to its shareholders. Under UK takeover rules, Anglo has until 5 February to make a formal offer.
