Underscoring the doubt is the truth that the Woodsmith undertaking includes polyhalite, a comparatively obscure fertilizer product with unproven demand. The undertaking has a checkered previous — its earlier proprietor Sirius Minerals Plc rode a wave of retail investor enthusiasm to develop it, solely to fail to lift the ultimate piece of financing.
If BHP is profitable with its takeover deal, it will spark the business’s largest shakeup in additional than a decade. BHP, already the biggest miner, would achieve management of roughly 10% of world copper mine provide forward of a forecast scarcity that’s anticipated to drive up costs. However on the fertilizer entrance, huge questions stay over how a lot demand there will probably be for polyhalite, at the moment a distinct segment product.
The Woodsmith mine makes the deal “very awkward certainly — it’s the explanation why we didn’t suppose BHP would become involved with Anglo American,” stated Ben Davis, a mining analyst at Liberum Capital Inc. “BHP clearly doesn’t suppose a lot of it.”
On Friday Anglo rejected BHP’s all-share provide, calling it undervalued and “opportunistic.” However some traders are positioning for BHP to lift its bid. Elliott Funding Administration has constructed a roughly $1 billion stake in UK-listed Anglo.
BHP has already made divestments a situation of its takeover bid and stipulated that belongings past copper, metallurgical coal and iron ore could be topic to “strategic evaluation.”
Woodsmith is “implicitly in that bucket,” Davis stated.
Final yr, Anglo took a $1.7 billion writedown on the undertaking whereas additionally unveiling plans to spend nearly $5 billion to deliver the mine into manufacturing by 2027 — taking its complete spending on Woodsmith to $9 billion.
The undertaking is “most likely extra of a nuisance than anything,” stated Maxime Kogge, an analyst at Oddo BHF SCA. “The undertaking is on good tracks, however demand prospects are nonetheless fairly elusive because the market does not likely exist right now.”
(By Jack Ryan)