The Northern Powerhouse Partnership said Anglo American’s £405m offer for Sirius Minerals is welcome news for the area and will hopefully bring some certainty to the 1,200 staff working on the project across its sites including Wood Smith Mine near Whitby and in Scarborough.
It said the project gives these communities – and particularly their young people – real opportunities they would otherwise have to leave the area to secure with the prospect of a further 2,500 high-skilled jobs being generated once the mine is up and running.
The deal will definitely help narrow the North-South divide although it will be a bitter blow for local shareholders, who have seen the share price sink from 45p in 2016 to close to 5.5p.
However, Sirius’ chairman Russell Scrimshaw said the group now faces a stark choice. If the acquisition is not approved by shareholders and does not complete, there is a high probability that the business will be placed into administration or liquidation within weeks.
He said if the deal falls apart, shareholders are most likely to lose all of their investments, putting the future of the entire project and its associated benefits for the UK at risk.
Sirius has already invested over £1bn in the project and Northern Powerhouse Partnership director, Henri Murison, said the mining project has become a crucial and very visible part of the northern economy.
The plan for the mine involves tunnelling under North York Moors National Park to exploit what Sirius has said is the world’s largest deposit of polyhalite, a multi-nutrient fertiliser.
It’s not only Yorkshire and the North East that will benefit.
Mr Murison said the project will deliver substantial economic benefits to the whole of the UK, including to the balance of payments.
“If the Government is genuinely serious about levelling up and narrowing the North-South divide, it will need to back privately led infrastructure projects like this in the future,” he added.
So will investors back the deal?
One analyst described the 5.5p per share offer as “an absolute steal”.
Unhappy shareholders now face two possible options if they don’t want to back the Anglo American offer.
Almost half of the company’s shares are held by 85,000 small investors - an amazingly high percentage - so they could in theory block the deal.
This would be a risky move and Sirius’ small shareholders lack a coherent body to represent them.
Anglo needs 75 per cent for the deal to go ahead. However, 50 per cent of the vote lies with institutions and they just want to get out.
“It’s Hobson’s choice,” said one analyst.
“They either get a small amount of money or they get none.”
Yes, shareholders may lose a lot of money, but 5.5p is better than nothing.
The second option for reluctant shareholders is to hope that Anglo’s bid flushes out a higher offer, which is looking increasingly unlikely.
If another bidder doesn’t emerge, shareholders probably need to accept that the 5.5p is the best they are going to get.
Yorkshire, as a county, needs to look at the positive aspects of this deal. Anglo is focused on the broader benefits its bid will bring to the region.
It will put in the necessary finances, it has the expertise to run the mine successfully and it is committed to Yorkshire and to raising the employee numbers.
North Yorkshire is a region with a proud mining heritage and Anglo American is keen to develop this.