Tees Valley mayor Ben Houchen says he remains confident that Sirius Minerals’ “once-in-a-generation” development of a giant fertiliser mine will still be delivered, despite the company warning it could not raise the £400m it needs to jump-start the next phase of construction.
On Wednesday morning, Sirius announced that it failed to secure the £402.8m needed to move ahead with the £3bn project near Whitby, which would see product transported to Wilton on Teesside for export.
Chris Fraser, managing director and chief executive 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 two financing plan.”
He added that, as a result, the company had “taken the decision to reduce the rate of development across the project in order to preserve funding to allow more time to develop alternatives.”
The scope of the construction activities on the North Yorkshire polyhalite mine will now be adjusted while a strategic review is undertaken over a period of “up to six months”, including a study of alternative financing methods.
Fraser added: “The process will incorporate feedback from prospective credit providers around the risks associated with construction and will include seeking a major strategic partner for the project.”
The company had previously blamed volatility on stock markets for a delay in issuing the bonds, which were needed to unlock a 2.5bn dollar debt package from JP Morgan that would finance the second phase of construction of the mine.
Reacting to the news, Tees Valley mayor Ben Houchen said: “I have been working extremely closely with Sirius and have been speaking with them on a daily basis to help them through this difficult time.
“I will continue to do so to ensure that this unique project becomes the success we all know it can and will be.
“Clearly this 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, 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.”
Around 900 people are involved in the building of the mine. Sites include its mine south of Whitby, a Wilton processing plant and a 23-mile underground conveyor system.