Sirius Minerals: Future of Yorkshire employer in question as mining firm looks for more funding

Company cancels planned bond sale “as a result of global market conditions, the ongoing uncertainty surrounding Brexit and the political environment in the United Kingdom”

(REUTERS)

The future of a giant mine in Yorkshire and the creation of more than 1,000 jobs have been thrown into doubt after the company behind the project said plans to secure financing have been derailed by Brexit and a lack of government backing.

Sirius Minerals announced on Tuesday that a long-planned $500m (£403m) bond sale will not go ahead, given the “current market conditions”. The company needed the additional funding from investors to complete work on the mine to extract polyhalite potash, a type of fertilizer, in North Yorkshire, as well as on a transportation tunnel to Teesside.

“As a result of global market conditions, the ongoing uncertainty surrounding Brexit and the political environment in the United Kingdom, the company and its advisers believe that [the sale] … is now unlikely to be achievable,” Sirius said.

The company originally expected to obtain loans guaranteed by Britain’s Infrastructure and Projects Authority. After postponing the bond sale last month, Sirius went back to the government asking for help with raising money from investors, but the government declined, the firm said.

It added that it will now slow the development of the project – which includes boring a mine more than a mile deep – as it looks for alternative sources of funding.

Richard Knights, analyst at Liberum Capital Markets, said: “The only seemingly realistic solutions are that the government guarantees the bonds, which they have rejected, or they bring on a strategic investor who takes an equity stake and is willing to finance it.”

The firm says on its website the polyhalite project, once completed, will create 1,000 long-term and high-skilled jobs and 1,500 job in the supply chain. The promise has helped it win support from local residents in a region with one of the highest unemployment rates in the country.

The project is already a vital source of jobs in the area, directly employing 1,200 people.

A government spokesman said: “We cannot comment on commercially sensitive matters. All requests for financial support must meet necessary lending criteria. When examining any request for financing, we have to assess the potential of a project against the need to protect taxpayers’ money.”

Sirius shares slumped 64 per cent on Tuesday morning before recovering slightly. By 12:30pm in London, they were down more than 52 per cent on the day.

Additional reporting by Bloomberg