LONDON (Reuters) - Sirius Minerals (SXX.L), aiming to make Britain a significant exporter of potash, on Monday unveiled its plans to convince the authorities it can mine the mineral, used as fertiliser, without harming the prized national park where the huge deposit lies.
The company, whose primary focus is on bringing the York Potash project into production, expects that at its height the scheme would employ 1,000 people and make north England a power in a potash market now dominated by Canada, Belarus and Russia.
By 2020, Sirius expects to produce 1.4 million tonnes of sulphate of potash (SOP), around a tenth of the estimated global demand for the commodity, with output rising to 4.1 million tonnes by 2024.
The company said it could protect the 60-year-old North York Moors National Park, where tourism is vital to the local economy, by locating underground both the big mine structures and many of the processes that involve noisy crushing and grinding.
“The designs that the team here have come up with are very good in terms of fitting in with the local landscape,” Chief Executive Chris Fraser said.
Global demand for potash, which helps plants develop strong roots and retain water, boosting yields and helping them resist disease and insects, is expected to soar in the long-term as an expanding world population requires more crops.
The proposals by Sirius, two years in the making, will be scrutinised by a public consultation process over the next six weeks, and the company will try to reflect the public’s comments before submitting a full planning application by the end of the year.
“We could provide a very large export industry for the British economy,” Fraser told Reuters.
Going on current prices, the mine would generate annual sales of $2.2 billion once it reaches full production, he added.
“The two questions that we’ve been asked ever since we came out with the idea for what we were going to do here, have been: Where is the mine going to be, and what is it going to look like? And we’re finally able to answer those questions,” he said.
Fraser said that so far there had been a positive response to the general idea of a mine and the jobs it would bring.
The company expects the planning authorities to make a decision on the mine by March 2013 and should that be favourable, it would hope to start building the mine at once, with initial production expected within three years.
The challenge facing Sirius in the meantime is to raise $2.7 billion to pay for construction of the first part of the mine.
Fraser said he was confident this would be possible, envisaging a combination of equity investments from future potash customers in either the company or the project, plus debt raised from issuing bonds or provided by banks.
“To our mind the two key elements to project execution are financing and permitting/approvals, and today’s release gives a clear indication that Sirius has significant in-roads to addressing the latter, warranting positive share momentum in the near-term,” Liberum analysts said.
Shares in Sirius, climbed 5.8 percent on the news, valuing the company at about 240 million pounds ($381 million).
($1 = 0.6296 British pounds)
Reporting by Sarah Young; Editing by Anthony Barker