Tag Archives: Woodsmith

Anglo American ends DMC Mining shaft sinking contract at Woodsmith project

Industrial minerals, Mine shafts and equipment, Mineral project development, Mining services, , , , , ,

Anglo American has confirmed its Crop Nutrients business has ended the contract of its shaft sinking contractor, DMC Mining Services UK Ltd, at the Woodsmith polyhalite project in the UK.

Anglo, which only took ownership of the asset earlier this year, said DMC staff were expected to transfer to Anglo American under the Transfer of Undertakings (Protection of Employment) Regulations, and construction progress was due to continue.

DMC was awarded the design and build contract for the construction of the deep shafts at the Woodsmith project back in February 2018 when the project was owned by Sirius Minerals.

This contract would have seen it engineer and construct four shafts at the project in North Yorkshire. Those shafts include a production and service shaft, each around 1,500 m deep, and two smaller shafts associated with the materials transport system, each approximately 350 m deep. It was to sink the deep shafts using Herrenknecht’s Shaft Boring Roadheader technology.

Herrenknecht developed the SBR for the mechanised sinking of blind shafts in soft to medium-hard rock. Based on the technology of the Herrenknecht Vertical Shaft Sinking Machine, the SBR offers improved safety performance compared with conventional shaft sinking methods while also achieving higher advance rates, according to the company.

DMC, itself, had become familiar with the technology after helping successfully sink two blind shafts to depths of -975 and -1,005 m, respectively, at the BHP-owned Jansen potash project in Saskatchewan, Canada.

Sinking activities with the SBRs at Woodsmith, meanwhile, were expected to start next year, with the machines having already arrived on site.

A spokesman for the Woodsmith project said of the DMC contract cancellation: “This new structure provides us with simpler internal processes and allows us to better manage the important transition between the sinking phase and ramp-up to steady state operations.

“It also gives us greater control over processes like local recruitment and training.”

STRABAG wins MTS contract for Sirius UK polyhalite project

Bulk handling, Industrial minerals, Mine shafts and equipment, Mineral processing, Mineral project development, Mining equipment, Mining project news, Mining services, , , ,

Sirius Minerals has varied its existing mineral transport system (MTS) tunnelling contract with STRABAG AG to include the engineering, procurement and construction of the fit-out of the system at its polyhalite project in Yorkshire, England.

The MTS fit-out scope includes the fit-out of the MTS conveyor, the maintenance railway, electrical and communications infrastructure, and all other services in the tunnel essential to the operation of the MTS.

Sirius said the price of the MTS fit-out was in line with the company’s capital re-estimate announced on September 6.

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

More than 50% of the MTS fit-out price is on a fixed rate or lump-sum basis, with the remainder based upon estimated prices to be converted into fixed prices prior to completion of stage two financing. The proposed schedule for the MTS fit-out is in line with the company’s overall project schedule, Sirius said.

This is a significant step forward for the project, with Sirius saying it has now completed its procurement for the major construction packages related to the stage two senior debt financing process.

Chris Fraser, Managing Director and CEO of Sirius, said the company’s efforts were now focused on the successful execution of its financing plan to fully finance the construction of its polyhalite project.

As previously announced, the company expects the capital funding requirement of the project to be $3.4-$3.6 billion (previously $3bn), with a $3 billion senior debt financing being the appropriate level of debt.

Given the timing of completion of the final procurement contracts, final lender commitment letters are expected to be received in December and January. The company is targeting financial close of stage two financing in the March quarter.

Sirius awards more contracts for North Yorkshire polyhalite project as capital costs rise

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Construction firm STRABAG and engineering group Jacobs have become the latest recipients of contracts for the Sirius Minerals’ owned North Yorkshire polyhalite project in the northeast of England.

STRABAG, which had already been awarded a design and build contract for the first drive of the mineral transport system (MTS) tunnel between Wilton and Lockwood Beck, near Teesside, has been contracted to construct drives two and three. Jacobs, meanwhile, has been given an engineer, procurement and construction contract for the materials handling facility (MHF) at Wilton.

These announcements came as Sirius updated its capital cost estimate for stage two of the project, which is expected to see the mine expand from 10 Mt/y of polyhalite to 20 Mt/y.

This has seen the stage two capital requirement go from $3 billion in November 2016 to $3.6 billion today.

The majority of the cost increase is associated with the MTS (pictured), which Sirius said reflected its own increased understanding of the “geotechnical characteristics of the strata within which the MTS will be excavated”.

This followed further ground investigation and seismic work that led to a refinement of the parameters set out in the geotechnical baseline report upon which the tunnelling contract was determined.

Chris Fraser, Managing Director and CEO of Sirius Minerals, said the cost increase reflected “an optimisation of the MTS tunnel design and a significantly improved risk allocation for Sirius to support the senior debt financing”.

The MTS cost increase is driven by a combination of the following factors:

  • Optimisation of the tunnel design including an increase in the planned internal diameter of the tunnel from 4.3 m to 4.9 m and an increase in lining thickness from 250 mm to 350 mm;
  • A decrease in advance rates as compared from 25 m/d to 17 m/d, and;
  • A commercial risk allocation which transfers construction and delivery risk to STRABAG.

The MTS includes a 37 km tunnel for a conveyor system to transport the polyhalite from the mine near Whitby to Wilton on Teesside for processing. STRABAG will construct the tunnel by using a Tunnel Boring Machine and the company expects to use a high-capacity conveyor belt system capable of transporting 20 Mt/y of polyhalite at 7.5 m/s.

The MHF will be constructed and managed by Jacobs’ UK subsidiary, with the EPC contract agreed on a target price basis, with financial incentives for completing the scope of work under budget, and financial penalties should completion be late or the cost be above the target price.

The plant has been scoped to include 7 Mt/y of granulated and 3 Mt/y of coarse product in its first phase of development but with a footprint for up to 20 Mt/y of granulated product.

Sirius said its procurement process for the project is nearing completion for the major packages and it is in the final stage of negotiations for the outstanding scopes of work.

Included in this is the MTS fit out, which includes the supply and installation of the MTS conveyor and the associated power supply, and the port facilities which includes construction of the outload circuit, wharf and product storage facility.

Sirius has identified STRABAG as its preferred contractor for the MTS fit out and is in advanced negotiations for provision of port facilities.

As the upfront capital for stage two of the project has increased, Sirius has developed a construction programme that defers the initial costs associated with the port facilities and has amended the scope of work to include temporary truck and train transportation of product from the storage facility at Wilton to the port.

“This enables the construction of the overland conveyor to be deferred until such time as it can be funded through operating cash flows, currently assumed to be 2025,” Sirius said.

While capital costs may have increased in this latest update, the company’s operating cost estimates have actually dropped from $32.6/t in stage one (10 Mt/y) to $29.4/t, and $27.6/t in stage two (20 Mt/y) to $27.4/t.

Sirius has already raised $1.2 billion for mine construction at the project, which is expected to produce first polyhalite in 2021, reach 10 Mt/y production in 2024, expand to 13 Mt/y in 2026 and grow further to 20 Mt/y in 2029.

Sirius Minerals signs materials handling agreement for Woodsmith potash project

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Sirius Minerals has secured up to 10 million tonnes per year of shipping capacity for its Woodsmith polyhalite mine in the northeast of England.

The miner, through its York Potash Ltd subsidiary (YPL), has signed a materials handling agreement with Redcar Bulk Terminal Ltd (RBT) under which RBT will provide port and ship loading services from its existing Redcar Bulk Terminal port facility (pictured).

RBT and York Potash Processing & Ports Ltd (YPPPL), another Sirius subsidiary, have entered into a long-term lease for land adjacent to the company’s existing port facilities for its finished product storage facilities.

Woodsmith contains the largest known, highest grade resource of polyhalite to be found anywhere in the world. The JORC resource of 2,660 Mt represents 7% of the project’s area of interest.

Chris Fraser, Managing Director and CEO of Sirius, said the agreement reduced the complexity of the company’s construction programme and “ultimately helps to simplify our stage two financing plan which is being finalised over the coming months”.

So far, the company has raised $1.2 billion for mine construction as part of its two-stage financing package. The company is expected to need another $1.8 billion for stage two.

Fraser said the RBT facility has been underused since the closure of the steel works in 2015 and this agreement will “ultimately help us deliver tremendous economic benefits for the region”.

RBT’s port facility is located adjacent to Sirius’ Bran Sands site and is also a deep-water terminal capable of handling up to Capesize-sized vessels. RBT has historically operated as a bulk import terminal in connection with the adjacent steel works.

In order to handle Woodsmith polyhalite exports, some capital expenditure, predominantly ship loaders and conveyors, is required at RBT to facilitate the loading of ships.

Pursuant to the agreement with RBT, Sirius will, as part of the soon-to-be-completed procurement plan, acquire and install the necessary ship loading equipment and systems onto the RBT-owned facility.

RBT will operate and maintain the new equipment installed and owned by Sirius. The services are to be provided for a period of 10 years from first shipment of polyhalite, subject to customary extension and termination rights for YPL.

While the agreement is for up to 10 Mt/y of production from Sirius, from the third year of production, YPL will guarantee certain payments to RBT for a minimum volume of materials handling.

These volumes are set in line with the company’s sales expectations.

Via YPPPL, the company has also secured a 30 year lease (with rights to renew) over 40 acres (16.2 hectares) of land adjacent to the RBT port facilities and the company’s Bran Sands port site. This land will be used to develop the company’s finished product storage facilities.

“Locating the storage facilities adjacent to both port locations provides the company with a more efficient loading circuit by substantially decreasing the distance from the warehouse (previously planning to be located at the materials handling facility at Wilton) to the ship loader,” Sirius said.

The company received planning permission from Redcar Cleveland Borough Council for locating the storage facilities on the RBT site on April 30, 2018.

Polyhalite will be extracted via two mine shafts at Woodsmith and transported outside of the National Park to Teesside on a conveyer belt system in an underground tunnel. It will then be granulated at a materials handling facility, with the majority being exported to overseas markets. The company is aiming to achieve first product from the mine by the end of 2021, ramping up to an initial production capacity of 10 Mt/y and then full production of 20 Mt/y.

Sirius appointed DMC Mining Services, a subsidiary of KGHM Polska Miedz, to carry out the shaft sinking at Woodsmith in February.