A major $9 billion fertilizer project in England called the Woodsmith mine is facing uncertainty due to BHP Group’s $39 billion attempt to acquire Anglo American Plc. The primary goal of the proposed merger, which would be the biggest disruption in the industry in more than ten years, is to secure copper resources. However, given BHP’s current obligations and strategic interests, it raises questions about whether Anglo American’s enormous fertilizer project can be carried out.
The largest mining firm in the world, BHP, has already committed over $10 billion to the Jansen mine, a major fertilizer project in Canada. The firm intends to accelerate Jansen’s expansion, demonstrating its dedication to taking a leading position in the world fertilizer market. The future of the Woodsmith project, which uses polyhalite, a less common and somewhat unknown fertilizer component, is becoming less clear due to this focus.
The Woodsmith project, which was first created by Sirius Minerals Plc, has a turbulent past. Retail investors gave the idea a lot of support, but when it could not get the last bit of funding needed, it finally collapsed. After acquiring the project, Anglo American has had trouble demonstrating its economic sustainability.
Ben Davis of Liberum Capital Inc., a mining analyst, drew attention to the complications that the Woodsmith project adds to the possible merger. We did not expect BHP would associate with Anglo American because of the Woodsmith mine, which makes the arrangement quite problematic. It is obvious that BHP does not give it any thought,” Davis said. This opinion is indicative of a general lack of confidence in the market for polyhalite, which is still a specialty commodity in the fertilizer sector.
Anglo American has committed to developing the Woodsmith site despite the obstacles, planning to invest an additional approximately $5 billion to bring the mine into production by 2027. This would bring its total project investment to almost $9 billion. Nonetheless, Anglo stole a substantial $1.7 billion in the previous year.
There is still a lot of speculation surrounding BHP’s post-takeover strategic orientation. Woodsmith most likely falls into the category of assets that will be subject to a “strategic review,” as the company has previously stated that any assets that are not directly related to copper, metallurgical coal, and iron ore will be reviewed. Given the hazy outlook for polyhalite demand, Oddo BHF SCA analyst Maxime Kogge called the project “probably more of a nuisance than anything else.”
Investor changes have further complicated the picture. Elliott Investment Management purchased a roughly $1 billion stake in Anglo, possibly anticipating a higher offer from BHP. Anglo American has said that talks or a bidding war may follow, dismissing BHP’s first all-share offer as opportunistic and undervalued.
