North Yorkshire Moors Association Press Statement

Monday December 3rd 2012

Production of Potash Abandoned
The claim by Sirius Minerals on the company website that they are the ”New Potash Powerhouse” is beginning to sound a bit hollow. The company have announced a project study update to be released in December which is in effect a new mining project which does not include the processing of polyhalite to produce Sulphate of Potash on Teesside. They will instead dry out the mined polyhalite and try to market it as a component of NPK fertiliser according to a statement by the CEO Chris Fraser. This is a far cry from being the “New Potash Powerhouse”.

April Master Plan Abandoned
The main features of the proposed mining project, which were set out in a key document earlier in the year and published by Sirius at the end of April, have been abandoned or changed. This study which in April was heralded as the blue print for a successful mining venture is almost unrecognisable in the light of this recent announcement, leaving one with the feeling that this project is being made up as it goes along. The basis of the project put forward in April was the processing of polyhalite to produce Sulphate of Potash (SOP). By-products of processing polyhalite like Magnesium Sulphate and Gypsum would also be sold directly to customers. However plans for processing on Teesside have been dropped in favour of a simple de-watering plant which will allow the mined mineral polyhalite to be dried and shipped out of the country, possibly as a granular component of fertiliser. Processing the polyhalite to produce SOP is a very expensive operation and no plans currently exist to do this.

Did They Get Their Sums Wrong?
Sirius appears to have made a major blunder in choosing to develop this mining project in the first instance to convert polyhalite to SOP. There has been, it seems, a reaction to a report by ‘Citigroup’ published in October. The ”Citi Research” report says that the cost of setting up the processing plant to convert the polyhalite to Sulphate of Potash would be $4.2 billion. In the April scoping study published by Sirius the figure of $2.7billion they quote is for the mine shaft, pipeline and processing plant, which leaves one wondering how they can possibly have arrived at this figure. Basically they appear to have got their sums wrong so how confident can investors be in any other costing in this project?

Flagship Mine Shaft Design Abandoned
Another main plank of the original proposals announced in April was the “flagship” mine shaft design with two 4km inclined tunnels. This was the preferred design which, they said, would reduce surface impact and the time taken to access the target geology and therefore cut costs. At the end of August York Potash announced that they would be abandoning their preferred option with the 4km inclined tunnels and adopt instead the alternative method of sinking the shaft head frame. This system they admitted would increase the number of surface buildings at the mine head location, reduce hoisting capacity, extend development time and increase cost.

Despite all the expensive publicity this is a project running out of time and money according to the research by Citigroup Citi Research

“Sirius is burning close to £2m a week. It is going to run out of money by March 2013 and needs at least $1.6bn of additional funding if it is to complete a mine and the associated shipment and port facilities needed to bring the polyhalite to market. The costs so far (and which we have based our NPV on) are on a provisional basis only and the end result could be very substantially higher”.

Cutting Corners
Financially Sirius Minerals are in a tight spot and that means that the York Potash project may be required to cut corners to meet deadlines. This may be the reason why they have breached the remit of a planning application on the Doves Nest drilling site and have proceeded with unauthorised construction work at the road
entrance and on the site itself. The National Park subsequently has issued an enforcement order. This cavalier approach by York Potash to construction work in the National Park does not bode well for the future.

Industrial Scale Experiment
The proposed pipeline which they need to transport the mined mineral polyhalite from south of Whitby to Teesside is untried technology despite what they say. No mineral has ever been transported in saturated brine anywhere in the world and certainly not polyhalite. This has only been tried on a test rig in laboratory conditions. It amounts to an industrial scale experiment and should not be taking place in a National Park and especially not passing through special protected areas with the status of SSSI’s. The pipeline will be operated at high pressure and in the event of a leakage of saturated brine would cause serious
environmental damage.

The North Yorkshire Moors Association
The North Yorkshire Moors Association are not opposed to mining polyhalite or potash under the North York Moors but oppose the location of the mine head in the National Park and the transport of the mineral by pipeline running through a large section of the Park. This project could be located outside the National Park and is a question of cost to developer versus cost to the environment.

Tom Chadwick
Chairman NYMA