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Anglo American is facing political opposition over plans to slash spending on a multibillion-pound mining project in the north of England — a key move by boss Duncan Wanblad to fend off a £39bn takeover bid by BHP.
Opposition to the radical restructuring plan involving spending cuts on Anglo’s £7bn ($9bn) Woodsmith fertiliser mine in Whitby, North Yorkshire, comes just a day after the collapse of the BHP bid.
The planned cuts at the mine, which employs more than 1,650 people in North Yorkshire and Teesside, has drawn ire from local Conservative politicians ahead of the UK’s national election in July.
“Despite public statements about spending this year, we are hearing locally that Anglo is moving quickly to demobilise contractors and put staff on notice,” said Roberto Weeden-Sanz, the Conservative parliamentary candidate for the Scarborough and Whitby constituency.
“We urge them to pause and properly consider the catastrophic impact that losing so many high-quality jobs could have on our area”, he added. “Local people have supported this fantastic project for many years and it should not be used as a sacrificial lamb to fend off a takeover from a bigger company.”
After a six-week pursuit Anglo rejected BHP’s request for an extension to the talks on Wednesday, prompting its rival to pull out of the takeover. Anglo chief executive Wanblad unveiled the Woodsmith restructuring earlier this month after BHP had announced its bid.
The Woodsmith project, which will produce a niche type of fertiliser, involves constructing two mine shafts, each more than a mile deep, along with a 23 mile-long tunnel leading to a fertiliser processing facility in Wilton, Teesside.
Anglo has said that slashing funds temporarily will save the project in the long run, allowing the company time to build itself a market for the yet-unproven product.
“In the immediate term, we are slowing down the development of the project while we strengthen our balance sheet,” Anglo said.
The mining company has invested about $3bn in the project. This will be reduced to $200mn in 2025 and $100mn in 2026, which will lead to job losses, Anglo said.
But it will “absolutely also be protecting and maintaining the project in its entirety so that we are in a position to accelerate again as soon as we can”.
Local politicians are unconvinced.
“If contractors are demobilised and staff are laid off then the project may never be restarted,” said Jacob Young, the Conservative MP for Redcar.
“The support and hard work of local people needs to be respected and we urge the Anglo board to reconsider its current course of action and properly engage with the community about the impact of what it is proposing before it’s too late.”
“Anglo should not be rushing into decisions that put the livelihoods of hard working and highly skilled Teessiders at risk,” said Ben Houchen, Mayor of the Tees Valley. “We want to hear from Anglo directly and for them to engage with government to make sure every option is considered before drastic measures are taken.”
In a letter seen by the Financial Times, Anglo told local politicians on Thursday that the collapse of BHP’s takeover bid meant the company would continue to work towards slowing down the development of the Woodsmith project. Tunnelling would continue but at a slower rate, it said.
“The impact on the size of all the workforce across all of the Crop Nutrients business will be significant,” said the letter, adding that Anglo aims to share numbers on job cuts by June 17.
As well as drastically slashing spending on Woodsmith, Anglo’s restructuring plans, which could raise up to $25bn by some estimates, include hiving off its South African platinum business, and selling its diamond brand De Beers.
“We are focusing the business on three product groups — copper, premium iron ore, and crop nutrients — so fertiliser is very clearly at the centre of things,” Anglo said. “That’s good news for Woodsmith.”
Additional reporting by Harry Dempsey.
