"Throughout 2022, we continued with the detailed design reviews and non-critical path studies, following which a number of areas were modified to align with Anglo American's standards and optimise value for the long term. Progress has continued to plan on the core project infrastructure, with capital expenditure of $522 million in 2022.
During the year, as part of the construction review, contracts were awarded for the shaft sinking operations, programme management services and construction management to ensure the project can be executed in line with Anglo American's stringent requirements."
"With the award of these contracts and other infrastructure improvements, activities at the deep shafts have progressed well during 2022. The service shaft is now more than 360 metres deep, while shaft sinking began 120 metres below the surface for the production shaft in January 2023, as planned.
Three intermediate shafts will provide both ventilation and additional access to the mineral transport system (MTS) tunnel. The Lockwood Beck intermediate access shaft was successfully completed in 2022 and is fully lined and connected to the tunnel. Work on the MTS shaft at the mine head progressed through 2022 and is 85% complete, and the excavation at the final intermediate access shaft at the Ladycross site commenced in early 2023.
Following a planned maintenance pause in mid-2022 to refurbish the tunnel boring machine and allow the connection with the Lockwood Beck shaft, the mineral transport tunnel is now past the 21 km point and is more than 56% complete, progressing at rates not seen since the start of the tunnelling activities.
As noted in a number of market updates throughout 2022, we are enhancing the project's configuration - including the capacity of the shafts and other infrastructure to accommodate higher production volumes and more efficient and scalable mining methods over time - to ensure we deliver maximum commercial returns from Woodsmith over the expected multi-decade asset life. These project team proposals, endorsed by the Board at the end of the year, indicate an extension of the development schedule and the capital budget, compared to what was previously anticipated.
In light of these changes, we now expect first product to market in 2027, with an annual capital investment of around $1.0 billion. We also expect design capacity to increase from c.10 Mtpa to c.13 Mtpa, subject to studies and approval. $0.8 billion is approved for 2023, with the bulk of initial spend on the shaft sinking and tunnel boring activities. As usual in developing underground mines, the schedule will largely be determined by the ground conditions encountered as sinking activities progress.
We believe that the changes we have made to the project have had a materially positive impact on the project's long term attractiveness and prospects. However, for accounting purposes at this early stage of the project's development, we have recognised an impairment of $1.7 billion to the carrying value of the asset within special items and remeasurements, reflecting the extension of the development schedule and capital budget.
Market development - POLY4
The ongoing focus of the market development activities is to develop and implement detailed sales and marketing strategies for each region and to support customers with their own market development activities to further promote POLY4 to the end users of the product - farmers.
The number of commercial scale on-farm demonstrations has accelerated, with more than 1,500 now complete and hundreds more in progress. The demonstrations continue to validate the extent of improvements that our product can deliver to farmers in terms of crop yield and quality. In addition, studies show POLY4 enhances soil health through resilience to compaction, erosion and run-off, as well as improve nutrient availability to crops and fertiliser nutrient use efficiency.
POLY4 offers farmers a solution to agricultural efficiency and sustainability challenges through its naturally low chloride multi-nutrient composition, its suitability for organic use and low carbon profile, with a carbon footprint up to 85% lower compared to conventional fertilisers, and with little waste generated in its production."
"There is no substitute for a map and compass and being able to use them."
"... to deliver minimal surface impact."