Anglo American boss insists: Our future lies with North Yorkshire mine we rescued

Duncan Wanblad’s eyes light up as soon as he talks about Yorkshire. The chief executive of Anglo American oversees a mining empire that spans the globe and digs up precious resources including gold, copper and De Beers diamonds.

But what really captivates him is the development of the Woodsmith fertiliser mine in the North York Moors National Park, a stone’s throw from the seaside town of Whitby.

Everything about the project is supersized. Beneath the picturesque countryside, the deposits of polyhalite – a new type of fertiliser – are the biggest known in the world. The two mine shafts are each a mile deep. Engineers are boring a 23-mile long transport tunnel to move vast quantities of the mineral from the mine to a port on Teesside.

Unfortunately for Wanblad, the bill for the project is enormous too. It has spiralled since his predecessor Mark Cutifani acquired Woodsmith Mine owner Sirius Minerals for £405 million in early 2020.

Bearing in mind that Anglo has already spent – at the last count – £2 billion on the programme, does he believe Anglo was right to take it over? The cost of project is expected to tot up to at least £7 billion in total.

Enthusiastic: Anglo American boss Duncan Wanblad, inset, and the Woodsmith mine

‘I do,’ Wanblad says enthusiastically. ‘There are a number of elements to that decision that remain absolutely true today.

‘The first is the world is going to struggle with nutrition as the population grows. Without a doubt.’ That, he argues, means the demand for fertilisers will increase dramatically. Perhaps more importantly to investors, he is convinced that the project will make big money.

‘It will spin vast amounts of cash off for decades,’ he says. He believes it will become ‘the cornerstone’ of Anglo’s portfolio of businesses in future. Really? The cornerstone of the entire company?

‘Absolutely,’ he says, adding that the deposit of polyhalite could stretch underneath the North Sea all the way to Germany. ‘It’s something that the world absolutely needs,’ he insists.

If Woodsmith were to become the lynchpin of the 107-year-old mining giant, it would be quite the turnaround in view of the fact that the takeover was a rescue deal.

Thousands of small local investors who had ploughed savings into Sirius felt that Anglo had snapped up the company on the cheap – and they may not be happy at the thought that it could reap a bonanza.

That, however, is still some way off, if indeed it ever happens. A final decision on whether to go ahead with the mine will not be made until next year, despite construction already being under way. Production is not expected to start until 2027.

And for all Wanblad’s gushing about Woodsmith, Anglo is looking for a partner – possibly a sovereign wealth fund or another mining group – to take a stake and spread the risk.

As analysts at Bank of America have observed, Woodsmith is a project that the company loves, but the Square Mile hates. Sceptics believe the costs could continue to mount up and that in reality there may not be a huge market for polyhalite.

Wanblad is staking large amounts of money on the project at a time when he is also embarking on cost-cuts and changes to the wider business, including its world-famous diamond group De Beers.

Perhaps this is not quite what he signed up for. An engineer by training, the South African has spent more than 30 years in the industry, much of it at Anglo.

When he took over the reins from Cutifani in 2022 the group was in rude health having just posted record profits and showering shareholders with almost £5 billion of dividends. But those bumper earnings were driven by a post-lockdown commodities boom that was losing steam.

As his second year in charge is coming to a close, the share price has halved since his tenure started. Investors were left confused and angry by a new strategy to make changes to targets and the amount of production in some parts of the business.

A nadir was reached in December when, during what was expected to be a mundane update on production, Anglo said it needed to cut costs by £1.4 billion, slash jobs and scale back its output of lucrative commodities such as iron ore and copper.

Few had suspected up to that point that Anglo needed such radical action. Two of its biggest businesses are struggling. Platinum and similar metals are flailing because of the slowdown in the Chinese economy. China is the second largest market in the world after Europe for platinum for use in industry and in jewellery.

The diamond market has been hit by lower spending on luxury jewellery and the rise in popularity of lab-grown gems.

Wanblad believes both businesses are at the ‘bottom’ of a huge slump in prices. ‘It is probably the worst that we’ve seen in the last 30-odd years,’ he says. ‘And that brings a lot of pressure to bear across the whole of the company.’ When will things start to improve? ‘You know, I wish we had that crystal ball,’ he says. With question marks over how quickly the global economy will grow and dozens of elections taking place around the world this year, he adds, the market still feels ‘volatile’.

He says: ‘It could be another year. It could be another two years. We just don’t know.

‘I think this is probably one of the most unsettling times in the industry that I’ve experienced,’ he admits.

The sinking share price has led to speculation that the company could be a takeover target.

Diplomatically, he says he is just sticking to his day job.

He does, however, rule out Anglo making any takeovers of its own for the time being.

Wanblad argues that running a diverse portfolio with an array of metals and minerals means the company can spread its risks.

However, the weight of the diamond slump became clear last week when Anglo wrote down the value of its De Beers stake by £1.3 billion in the company’s annual results.

Profits were down by a third and the dividend was chopped.

Wanblad is now ‘systematically reviewing’ every asset the company owns. He seems unafraid to kill any of his darlings – apart from Woodsmith.

Whatever the short-term outcome of the shake-up, these actions early on in his tenure are likely to define his legacy.

Mining attracts big personalities. But when we meet in Cape Town, he is quietly spoken and more corporate than cavalier.

Perhaps some of his thoughtful manner is also due to his understanding of exactly how the industry is perceived.

Commodities such as copper, rare earth metals and lithium are used in electric cars and in many other applications. These resources are all needed on an unprecedented scale in the green transition.

Historically, mining has a reputation for being environmentally unfriendly and dangerous.

It also has a reputation for very poor governance. Is that an annoyance?

‘It doesn’t frustrate me,’ Wanblad says. ‘I think there are some very legitimate reasons that it is perceived to be bad. I think it negatively impacted many, many host communities and many countries perhaps, in the early years of mining.

‘We have to do it in a different way,’ he says. Otherwise, the harm caused by the industry could outweigh the benefits of the commodities it digs up.

The ‘resource curse’ – the failure of many countries to benefit from their natural bounty because of exploitation or mismanagement – is ‘a very real thing’. Wanblad adds: ‘It is down to responsible mining companies to change that.’