Dozens of farmers in Yorkshire, England, are on the verge of becoming millionaires thanks to a 250 million-year-old layer of minerals 1.6km below their muddy boots.
Chris Fraser, a former investment banker, has submitted a planning application to mine the world’s largest deposit of potash — a powerful fertilizer — in an ancient seabed deep below the North York Moors National Park.
Fraser, who has been planning the mine for a decade, said exploratory boreholes showed that the moors held “the world’s largest and highest-quality resource of polyhalite,” a mineral-rich form of potash.
If the planning application, which is supported by the local council and all neighboring members of parliament, is approved by the North York Moors National Park Authority, it will lead to the construction of the biggest British mine in a generation and create 1,000 jobs.
Landowners could be in line for a lottery-style windfall because Fraser’s company, Sirius Minerals PLC, has promised to pay out more than ￡1 billion (US$1.5 billion) in royalties over 50 years.
“The landowners own the minerals and we will pay them a royalty for using them,” Sirius finance director Jason Murray said.
He declined to say how much the landowners would be paid, but said a complex royalty payment formula had been agreed after two years of negotiations between 400 landowners that involved eight law firms.
“Some of them will become very wealthy,” he said. “There will be a few new tractors around the area.”
He said that some large landowners near the mine, south of the village of Sneaton, near Whitby, would become multimillionaires within a few years. If the ￡1 billion were split evenly between all landowners, each would get about ￡2.5 million.
Fraser, a former Citigroup Inc banker, will also make a packet since he owns 8 percent of the company. Other directors own about a further 8 percent, with 10 percent held by people local to the mine. The remainder is owned by institutional investors.
The potash and polyhalite deposits are the remains of a Permian-age sea that stretched from England to Poland 250 million years ago.
Geologists have known for decades that the moors contained big mineral deposits and global mining companies submitted plans for mines in the 1970s, but did not follow through when the price of potash dropped.
“Rio Tinto [Group] looked at it in the 1970s, when the prices were about US$100 a tonne,” Murray said. “Then when the price fell, lots of the data was left in a garage.”
Of the mining planning applications granted in the 1970s only one, Cleveland Potash mine near Boulby, ever began operations. It is still working today and is Britain’s biggest mine, but would be surpassed in size by the Sirius mine.
Soaring global demand for fertilizer has sent potash prices beyond ￡250 a tonne. Recent test drilling resulted in a near-doubling of the moor’s expected potash reserves from 1.3 billion tonnes to 2.2 billion, making it the world’s biggest potash deposit. Murray said there was so much of the mineral under the moor that there was “more than you could ever mine.”
The location of the potash inside a national park made it very difficult for global mining companies to establish projects, but Murray said that the rising price of potash has made it possible to invest more money in making the mine unobtrusive.