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York Potash project moving forward 15 Nov 2018

TunnelTalk Reporting

The construction of the port handling facility for the York Potash processing plant in Teeside, UK, is a step closer as Sirius Minerals subsidiary York Potash Processing and Ports Ltd and McLaughlin and Harvey have entered into an engineering, procurement and construction contract.

Main elements of the Woodsmith Mine development
Main elements of the Woodsmith Mine development

The scope of the contract includes the design and build of works associated with the port handling facilities including storage facilities for 250,00 tonne of product, ship loading equipment, ship outload infrastructure and final product screening facility.

The contract price, to be incurred in GBP and EUR, is on a lump sum basis and is in line with the company capital re-estimate announced 6 September 2018.

The stage 2 financing related procurement programme is nearing completion for the major construction packages with the mineral transport system (MTS) still remaining. Strabag has been identified as preferred contractor for the MTS fit-out and negotiations for this work are in final stages.

“We are pleased to have entered into another significant construction contract for the polyhalite project. In 18 months we have made good progress and are nearing completion of the procurement programme to support stage 2 financing,” said Chris Fraser, Managing Director and CEO of Sirius.

“The construction of port infrastructure is an example of the level of investment and skilled job creation being delivered in Teesside as we develop a project that could make the UK a world leader in the fertiliser industry.”

“The level of commitment to Teesside from this project is huge as it will generate jobs for local people and help expand our global reputation. The successful development of this project will see over £400 million invested in Teesside and the regeneration of the former Redcar steelworks port frontage,” said Ben Houchen, Mayor for Tees Valley.

The port handling facility will receive the polyhalite fertiliser after it has been transported from the Woodsmith site via a 37km mineral transport system and processed into the finished Poly4 product.

Sirius Minerals expects to export 20 million tonne of the product annually to global markets. Offtake agreements for 8.2 million tonne have already been signed with customers from four continents.

Procurement is now complete on all major construction packages on the project as the mineral transport system fit-out has also been agreed and finalised with contractor Strabag and McLaughlin and Harvey is working towards financial close of stage 2 financing in early 2019.

As previously announced, the Company expects the capital funding requirement of the Project to be US$3.4bn - US$3.6bn (previously US$3bn).  The Company believes that a US$3bn senior debt financing is the appropriate level of debt and will not seek to increase this amount. 

The transport system will carry polyhalite from 360m underground at the Woodsmith site to the materials handling facility at Wilton, Teesside, on a 37km underground conveyor system.  The tunnel will be constructed by three tunnel boring machines.  The conveyor system in the tunnel will be designed to handle 20 Mtpa of throughput.  The tunnel will also contain maintenance rail and services, including a 66kV power feeder from Wilton International industrial complex.

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