LONDON - Anglo American on Thursday announced a $1.7-billion writedown on its project to produce fertiliser nutrients in Britain, as it set out its budget for the mine and flagged a later-than-expected start to operations.

The group estimated it would spend around $1-billion a year to bring the Woodsmith project in north-east England to production by 2027. The mine has the world's largest known deposit of polyhalite, a multi-nutrient fertiliser.

The London-listed miner bought Woodsmith in Britain's North York Moors National Park for 405-million pounds ($488.35-million) in 2020 and said on Thursday it has spent $1.35-billion so far expanding it.

It now expects first production from 2027, reaching around five-million tonnes per annum by 2030, compared to an estimate from its previous owner of 2024 with output of 10 million tonnes a year in the initial phase.

"Depending on how we shape and develop the markets from there, we will expand it from the 5-million tonnes to the 13-million tonnes," CEO Duncan Wanblad told reporters.

"We have taken a writedown on it now because the timeline and budget have been extended... but absolutely be in no doubt that we are setting Woodsmith up to generate significant cashflows for many, many decades, we'll be building it out now until 2027," Wanblad added.

Shares in the miner fell 2.3% by 10:02 GMT, underperforming peers.

NEW PRODUCT
Prices of crop nutrients have soared since Western sanctions were imposed on top producer Russia over the invasion of Ukraine.

The world's largest miner BHP Group has also entered the potash fertiliser market with its Jansen project in Canada, betting on rising demand for the commodity over the next few decades.

Polyhalite, a naturally-occurring mineral containing nutrients that ensure plant growth, is currently produced in low quantities.

"The Woodsmith project writedown is unhelpful as the acquisition of this project via Anglo's takeover of Sirius Minerals was controversial at the time, in part due to the fact that a market for the polyhalite product had not yet been clearly established," said Christopher LaFemina, equity analyst at Jefferies.

"Anglo had not expected the challenges it has encountered in designing this project. It is important that the company gets this project right from this point forward."

The global miner, which also produces copper, iron ore, precious metals and diamonds, joined most of its rivals in reporting lower full-year earnings and shareholder dividend, hit by lower commodity prices and higher mining costs.

It declared a full-year dividend of $1.98 per share, down from $4.99 per share in 2021 and a 30% fall in underlying core profit for 2022 to $14.5-billion, slightly above an average forecast of $14.35-billion from 14 analysts compiled by research firm Vuma.