Cash injection for North York Moors Park pit plan
The company behind the ambitious proposal to sink a mile-deep mine in the North York Moors National Park has been thrown an economic lifeline after its share price slumped to a point where questions were being asked over the future of the controversial project.
Sirius Minerals, which owns the York Potash project, has had a £25m boost to its coffers from a New York-based investment group. The money will fund it through what is likely to be several more months of a planning process that has already taken over two years.
However, judging by the plummeting share price of the company, confidence in the project ever being achieved is still in the balance. At the beginning of July the company's shares on London's AIM stock market were trading at 30p. By the first week in August they were down to 11p. News of this latest new American investment has given it a boost, but as I write this article they are trading at just a shade over 15p.
Planning permission remains the prime stumbling block.
The North York Moors National Park was established over 50 years ago to protect some of the country's most stunning landscapes. The Park Authority has the legal responsibility to decide whether new developments pose a threat for future generations or can be integrated into local economic life.
Sirius Minerals has maintained since it first asked for permission in 2011 that, despite its huge size, the proposal meets all those planning issues. It claims modern mining techniques will reduce environmental damage to the minimum.
Revolutionary eco-friendly transport for the millions of tonnes of mineral is planned. It will be turned into slush before it even reaches the surface then pumped through a 30-mile underground pipeline to Teesside docks.
And it has convinced many in the local business community that the economic benefits will be well worth any short-term construction disruption by employing 1,000 people when the mine is in production and creating at least three times as many indirect jobs.Surprise delay
The big question of whether the national park believed those arguments should have been answered in July with the scheduled publication of an initial report prepared by the authority's planning officers.
On the day I was all set to be on the doorstep of the national park headquarters in the North Yorkshire market town of Helmsley with a BBC Look North satellite live broadcasting vehicle. With hours to go Sirius Minerals sprang a surprise by requesting that the planning process for the York Potash project be suspended and the report temporarily shelved. The company said it needed more time to produce extra information on the environmental impact.
Its media team told me it had nothing to do with the start of that run on its share price which had gathered pace in the hours before the planned announcement from the park planners.
Andy Wilson, the chief executive of the North York Moors National Park, told me he had "reluctantly" agreed to the delay because it is "a decision that must be right".
This is by far the largest and most complex planning application in the history of any national park. It is also straining North York Moors financial resources with the bill to the public purse already heading towards half a billion pounds and the prospect now of many more months of costly extra work.
Even bigger stakes
The money involved so far is tiny compared to the billion pounds or more Sirius Minerals will need to raise for construction costs if it is eventually granted planning permission.
To raise that kind of sum Sirius has to convince investors that it has a market for its products that will eventually lead to profits. That too presents the company with a challenge.
Firstly, the international price of potash, used across the world as an agricultural fertiliser, has fallen. Secondly, what lies underneath the North York Moors is actually polyhaylite- a similar mineral to potash but containing lower levels of the potassium compounds which are the main component of value to farmers.
Chris Fraser, managing director and CEO of Sirius, is quoted as saying the extra funding from his new American backers will help the company overcome all those issues: "We are delighted to secure this financing which demonstrates confidence in the ongoing development of the York Potash project, especially at a time of increased volatility in the sector.
"These funds will enable the company to undertake the necessary work needed to secure the required approvals, in addition to other development initiatives, including global crop trials that will continue to demonstrate the unique value of polyhalite and de-risk the project."
Brave talk, but it cannot disguise the fact that it could now be many more months before it become clear whether the potash mine plan will ever get off the drawing board.