Download Report

York Potash Ltd
7–10 Manor Court | Manor Garth
Scarborough | YO11 3TU
North Yorkshire | United Kingdom
Tel: +44 1723 470 010
Ms Janet Horne
Principal Planning Officer
Redcar & Cleveland Borough Council
Redcar & Cleveland House
Kirkleatham Street
Redcar
TS10 1RT
20 March 2015
Dear Ms Horne,
RESPONSE TO CLEVELAND POTASH LIMITED SUBMISSIONS
Background
The submissions from Ward Hadaway (dated 27 November 2014 and 12 December 2014) on behalf of
Cleveland Potash Limited (“CPL”) with regard to the York Potash Limited (“YPL”) planning application
contain specific objections on the MTS tunnel and also general objections based on “economic grounds”.
The second submission also contains references to the operation and business strategy of CPL and
particularly in relation to perceived issues with regard to subsidence, sterilization of resources and
employment.
In order to simplify the claims made by CPL, York Potash believes that its key issues can be summarised as
follows:





Onshore subsidence and interaction between the two operations;
Proximity of the MTS to CPL’s potential future workings;
Offshore subsidence / safety barrier;
CPL’s theoretical southern expansion; and
Staffing and workforce issues.
In order to reduce the number of issues that need to be considered by the Authority YPL has endeavoured
to engage directly with CPL in a constructive manner to try to address its concerns and seek the removal of
the objections. This would have then avoided the need for this formal response to the objections raised by
CPL. Aside from one issue being partially progressed, CPL has not taken up offers to engage in constructive
dialogue to seek resolution to the issues it has raised in its submission to the Authority. This has resulted in
the requirement for YPL to send this brief response directly to the Authority to ensure that its perspective
on the issues raised is understood.
Company Registration No. 07251600
VAT No. 159064202
York Potash responses to CPL’s key issues
Onshore subsidence and interaction between the two operations
CPL claims that the proximity of future operations of both YPL and CPL could potentially interact negatively
as a result of mining and any subsidence created, causing issues underground and/or on the surface that
could potentially result in damaging subsidence claims. It should be noted that the Company is not aware
of any damaging subsidence claims at Boulby since its construction. As an integral part of the YPL mine
design subsidence modelling has been undertaken on behalf of YPL by their mining consultants and it is
predicted that there will be little if any subsidence created by polyhalite mining and certainly no damaging
subsidence impacts. It is also the case that a condition placed on YPL will be to submit a subsidence
monitoring proposal to NYMNPA that would ensure all subsidence is measured and publicly reported.
In a letter from myself to David Zvida, Managing Director of CPL dated 21 January 2015 (a copy of which is
included in Annexure 1), YPL proposed the establishment of a Technical Interaction Zone and a Joint
Technical Forum where both companies could share all relevant geological and geotechnical data, mine
plans and subsidence monitoring data and interpretations. Following this, should any claim be made
relating to damaging subsidence, then CPL and YPL would be able to ascertain which operation was
responsible. If the two parties could not agree then an independent arbitrator would be appointed to
allocate responsibility. The sharing of technical information in this area would enable both operations to
operate within their legal rights without interference from the other.
Proximity of the MTS to CPL’s potential future workings
This issue does not affect YPL’s right or ability to construct and operate the MTS, rather it reflects a concern
that CPL has expressed that its operations might be impacted or constrained by the MTS.
It considered highly unlikely that that any future mining by CPL would have any impact on the MTS. This
was verbally confirmed as being understood by CPL’s technical team in discussions at a meeting held on 6
November 2014.
YPL has offered to enter into a legally binding agreement that accepts a position that CPL will be effectively
free to operate as normal and YPL would not seek any compensation from CPL should its normal operations
result in damage to the MTS. The key operative provision of this draft agreement includes undertakings
that, in the event of any damage being caused by lawful operations in accordance with reasonable practice
expected of a miner of potash and in accordance with any planning consent for such mining of potash, then
York Potash shall not be entitled to make any claim against CPL for such damage.
This issue has now been under discussion since June 2014 and has been the subject of extensive legal
discussions, meetings and exchange of draft legal agreements between YPL and CPL. At this time mutually
acceptable terms have not been agreed. Should they be agreed, YPL will update the Authority accordingly.
Offshore subsidence / safety barrier
YPL was granted rights to extract minerals offshore by the Marine Management Organisation on
18 January 2013. As a result this issue is not one for consideration by the Authority.
www.yorkpotash.co.uk
Page 2 of 4
CPL’s theoretical southern expansion
YPL does not believe that this is a matter for the Authority to consider. CPL is not believed to have any
mineral rights agreements for land outside its current planning boundary. In addition, YPL is firmly of the
view that the claim lacks technical substance and is unreasonable.
Any suggestion that the YPL reserve is accessible from the CPL mine without additional major development
(such as additional shafts and related surface infrastructure) inside the National Park is extremely
questionable. In addition, in the event of the existing or future water inflows at the Boulby Mine becoming
uncontrollable, as has recently been seen in other potash mines around the world, a connection between
the YPL reserve area and CPL workings would put the whole of the UK’s potassium resource in jeopardy.
YPL has applied for planning permission to extract minerals from the area where it currently has mineral
rights agreements with landowners. CPL’s planning permission and YPL’s can overlap as mineral rights
owners are entitled to deal with their mineral rights however they see fit. CPL’s submission is essentially
seeking to deprive landowners of their rights to deal in a free manner with their land and essentially create
a monopolistic position through the planning system. As a result any statement about potential future
expansions into the area where YPL has mineral rights is irrelevant.
CPL also makes a statement that it believes that the YPL mine should be ideally located further south than
the Dove’s Nest location. While YPL does not believe this statement has any technical basis against the
Dove’s Nest location, it does add further endorsement to the reasons why the Whitby Enclave locations are
not suitable as alternative mine head locations. The Whitby Enclave sites would see the critical mine
infrastructure for the York Potash Project located immediately adjacent to the CPL planning boundary. It is
therefore assumed that CPL would have a more significant objection to those alternative sites in the Whitby
Enclave.
Staffing and workforce issues
CPL’s submission makes a number of false claims and provides ill-informed statements about the
recruitment of the YPL workforce. Its statements, in part, appear to effectively be an objection to job
creation and economic growth in the region rather than specific issues related to YPL.
Should there be any valid concerns with regard to the future supply of a skilled workforce for the YPL
operation, the proposed skills collaboration described in the letter in Annexure 1 and the undertakings
contained in the draft Section 106 Agreement should ensure such concerns would be effectively managed
to the benefit of YPL, CPL and the region as a whole.
By way of background it is worth noting that YPL first approached CPL in 2011 to seek collaboration on skills
and training initiatives but all approaches have been rejected by CPL. YPL has also already been engaged in
a very proactive educational awareness campaign around the future skills requirements for approximately
three years.
Other observations
In its submissions CPL’s legal adviser makes a number of statements about what its client “believes” its
reserve and resource position is. The technical nature of the JORC Code requires that statements of
reserves and resources should be independently verified statements of fact rather than beliefs.
The submission, dated 12 December 2014, states that “Our client believes it has reserves of 500 million
tonnes of polyhalite.” YPL has now seen a more recent conflicting estimate contained in a presentation by
CPL that has been made public that suggests this belief has now changed or is materially different. The
www.yorkpotash.co.uk
Page 3 of 4
presentation was to the Mining Institute in Newcastle on 12 February 2015 entitled, Development and
Mining of the Polyhalite Seam at Boulby Mine. In that presentation CPL included a slide stating that its
“Measured Reserves” of polyhalite were estimated to be only 20 million tonnes. A copy of that slide is
attached in Annexure 2 for your information. Within JORC there is no category of Reserve called
‘Measured’ only ‘Proven’ and ‘Probable’, so it is assumed that this is the current estimate was of the total
reserve.
Conclusions
YPL has made genuine and reasonable proposals to address the concerns made by CPL in its submissions.
To date these proposals have been met with a lack of any serious engagement by CPL. We can only
reasonably conclude that there is no desire to seek resolution to these concerns and instead CPL is just
seeking to raise avoidable uncertainty around the planning determinations. Clearly this is not the purpose
of the planning system.
I hope this provides some assistance to the Authority in considering the content and nature of the
submissions made by CPL.
Yours sincerely,
Chris Fraser
Managing Director and CEO
Sirius Minerals plc
Cc:
Chris France, Director of Planning, North York Moors National Park Authority
David Zvida, Managing Director of Cleveland Potash Limited
www.yorkpotash.co.uk
Page 4 of 4
ANNEXURE 1
Letter from Chris Fraser, Managing Director and CEO of Sirius Minerals Plc to David Zvida, Managing
Director of Cleveland Potash Limited dated 21 January 2015.
Sirius Minerals Plc
rd
3 Floor Greener House | 66–68 Haymarket
London| SW1Y 4RF
United Kingdom
Tel: +44 203 327 3660
David Zvida
Managing Director & General Manager
Boulby Mine
Loftus
Saltburn
TS13 4UZ
21 January 2015
Without prejudice
Dear David,
Thank you for meeting with me on 16 January to discuss a range of important issues. Following our meeting I
thought it would be appropriate to confirm in writing some of the proposed solutions we discussed.
I believe it would be beneficial for both Cleveland Potash Limited (“CPL”) and York Potash Limited (“YPL”) to
formalise the proposals that I put to you with regard to the concerns raised in CPL’s objection to the YPL planning
application. I believe these proposals provide a sound basis for CPL to remove its objection to the local
authorities.
Indemnification Agreement
My understanding is that our teams are in the process of finalising a legally binding agreement that confirms that
CPL are able to continue to mine without hindrance or claims from YPL or its successors in relation to interactions
with YPL’s transport system. This currently covers the existing lease that CPL hold with Mulgrave Estate and any
future mining lease that may be agreed.
This agreement when concluded would mean that CPL can continue its normal operations and YPL waives its
rights to seek any compensation from CPL, should those normal operations result in damage to YPL’s transport
system (the tunnel and associated shafts). This would ensure that the YPL transport system will not create any
impediment or hindrance to CPL’s normal operation within its existing or future mineral rights.
Conclusion of this agreement should result in this aspect of your objection to the local authorities being removed.
Your assistance in prioritizing this with your legal team to ensure an expedited conclusion to these discussions
would be appreciated. Our team stands ready to work quickly to bring this to a satisfactory mutually beneficial
conclusion.
Company Registration No. 04948435
VAT No. 159064202
Technical Interaction Zone and Joint Technical Forum
In relation to the concerns expressed in CPL’s objections to the local authorities about mining interaction and
subsidence related issues I suggest that we establish a Technical Interaction Zone (“TIZ”) within 1.5km of our
respective planning boundaries, as illustrated in Figure 1 below.
Figure 1: Suggested Technical Interaction Zone
A simple binding agreement could be drafted that relates to the undertakings that each party makes in relation to
the TIZ. I would propose that CPL and YPL agree to share all geological and geotechnical data, mine plans and
subsidence monitoring data and interpretations that relate to the TIZ. Should any claim be made relating to
damaging subsidence then CPL and YPL would meet to agree which of the two parties was responsible for the
damage if at all. If an agreement cannot be reached between CPL and YPL an independent arbitrator would be
appointed to allocate responsibility.
If you agree to this proposal as a solution I will instruct my team to draft an agreement between CPL and YPL that
would set out the definition of the zone, what data would be shared, obligations on each party and the
mechanisms and timetables for meeting to resolve issues as they arise.
As both parties will ultimately have a duty to monitor this area for subsidence once our respective workings
options for sharing monitoring points should be discussed. If compatibility allows then it should be possible to
give access to the live data from the relevant fixed GNSS stations supporting the subsidence monitoring of the YPL
area. We would obviously appreciate it if the same courtesy could be extended to us should CPL have stations
located in a position that may be of use to the YPL network. The YPL system is currently being planned so your
input on this matter would be appreciated in order to ensure a compatible system is specified.
In addition to the undertakings described above in relation to the TIZ, we would welcome the opportunity to set
up a Joint Technical Forum in which we can discuss topics of concern to both parties such as (but by no means
limited to) subsidence, mining interaction, mining legislation, and environmental issues. This forum could address
Page 2 of 3
matters of concern to both parties and agree on the best way to mitigate the concerns and how to work together
on key matters to ensure that both CPL and YPL can operate with no negative operational impacts on the other.
The undertakings described above will address all the concerns expressed in the CPL submission and specifically
identify any impacts from subsidence and which operation has responsibility. Once agreed, this should result in
CPL removing these aspects of its objection submission to the local authorities.
Skills Collaboration
The York Potash Skills Strategy sets out how we intend to deliver the aim of sourcing at least 80% of the
operational workforce from the local area. Implementing the strategy will not only significantly increase the
supply of people with the skills and qualities required by York Potash, but also for other businesses in the area
requiring similar skill sets.
Our strategy is to have a core of around 200 high-quality and experienced staff who would train inexperienced
personnel recruited for their skills transferability, attitude and their willingness to embrace York Potash’s
operational philosophy. We do not anticipate that a significant number of the experienced staff would be
recruited from CPL and would welcome the opportunity to work collaboratively on workforce development
issues.
In the first instance we suggest setting up a joint workforce development group in order to explore respective
challenges and opportunities and agree ways of working together to address these. Areas for collaboration
include:
 Developing the skills pipeline by working with education institutions to raise awareness of the careers
young people could have with YPL / CPL, and collaborate in developing apprenticeship opportunities;
 Joint programmes to identify and train adults with transferrable skills;
 Investigate the potential to source experienced staff from the coal mines at Kellingley and Thoresby,
which are both planned to close in the near future, and respectively employ 700 and 600 staff; and
 Identifying public funding streams to support education and training activities
It is our belief that collaboration on the issues as identified above would mitigate any concerns that there would
be any negative interaction between YPL and CPL. The proactive approach that has been proposed would bring
benefits to both organisations by increasing the available pool of skilled employees in the region to ensure that
any competition for skilled workers does not lead to an increase in wage levels above a normal inflationary level.
I look forward to hearing from you on the above proposals and would welcome your comments. If you are willing
to proceed to conclude these matters I am certain we could quickly reach a good faith agreement that provides
sufficient comfort to you to enable the entire CPL objection to be removed.
Yours sincerely,
Chris Fraser
CEO & Managing Director
Page 3 of 3
ANNEXURE 2
Slide 5 from Development and Mining of the Polyhalite Seam at Boulby Mine given at the Mining
Institute in Newcastle on 12 February 2015
CPL Polyhalite – Reserves and Resources January 2015
Measured Resource - 800 million tonnes
Measured Reserves - 20 million tonnes
Reserves are based on:
• ore that can be mined currently
• a 4 metre mining cut
• a 50% extraction rate
6