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Potash mine cash crisis forces construction go-slow

North York moors potash mine developer Sirius Minerals is scaling back construction on the project amid a funding crisis.

Shares in the firm crashed 60% to 4p recently as it reported failure to raise $500m for the next major phase of construction for the huge fertiliser mining project.

The firm said it would now look at cutting development costs and try to find alternative funding.

Sirius chief executive Chris Frasers said the project had around £180m or six months of cash left under the reduced programme before construction would have to halt.

“Due to the ongoing poor bond market conditions for an issuer like Sirius we have not been able to deliver our stage 2 financing plan,” he said.

“As a result, we have taken the decision to reduce the rate of development across the project in order to preserve funding to allow more time to develop alternatives and preserve the significant amount of inherent value in this world-class project.

“The company will now conduct a comprehensive strategic review over the next six months to assess and incorporate optimisations to the project development plan and to develop a different financing structure for the funds required.”

The board of directors added that it believed additional financing would be secured in the coming months, but warned there was a risk that a successful outcome may not be reached.

The Woodsmith mine project involves sinking two 1.5km shafts below a national park on the North York Moors to access a huge deposit of polyhalite, a mineral that can be used as fertiliser.

Excavation of the main shaft has reached its target depth of 118m using conventional excavation techniques and a shaft boring roadheader has now arrived at the Woodsmith Mine site to continue excavations.

Austrian tunnelling specialist Strabag has the contract for the three main 23-mile tunnel drives to transport excavated material to the coast.

The first of three tunnel boring machines “Stella Rose” is presently at work and completed 1.2km of tunnelling, over two months ahead of schedule.

A contract was signed with P J Carey at the start of this month to deliver port handling facilities at Teesside, cancelling a previous contract with McLaughlin & Harvey.

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Shapps halts woodland clearance during HS2 review

Transport secretary Grant Shapps has halted removals of ancient woodlands for HS2 while the independent Oakervee review is underway.

Transport secretary bows to pressure from woodlands campaigners

Shapps said clearances would only be allowed during Oakervee’s work if it was shown to be absolutely necessary to prevent major cost and schedule impacts.

Around 60 ancient woodlands will be impacted by the high-speed rail project.

He said HS2 would be allowed to continue with other important preparatory works which, if delayed, would have a damaging impact on cost and schedule if HS2 were to continue.

“There is no sense in hiding the challenges HS2 faces, or masking the difficult decisions that need to be taken.

“So, as Douglas Oakervee’s review continues, we must take a sensible approach and recognise that some works simply cannot be undone later.

“Having listened to the concerns of affected residents and Parliamentary colleagues, I have ordered HS2 Ltd to consider what works affecting ancient woodland clearances can be delayed for the duration of the review.

“This ensures we avoid irreversible decisions without major impacts on cost and schedule. HS2 may be a complex project overall, but I think this request is just common sense.”

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McLaren confirms £190m luxury London resi deal

McLaren has been awarded the construction contract for a £190m residential development in London’s Fitzrovia.

The project is being carried out by a joint venture between Art-Invest Real Estate UK, German real estate developer ECE and Dukelease Properties.

The development will create 88 luxury apartments, 35,000 sq ft of commercial space and 15 affordable housing units and is scheduled for completion in 2021.

Luka Vukotic, Development Director at Art-Invest Real Estate UK, said: “We are excited to appoint McLaren on our first London development.

“Their capability and approach aligns with our vision to create an outstanding building and a high-quality residential product in one of London’s most vibrant locations”.

Richard Leslie, CEO of Dukelease Properties, added: “We are pleased to work with McLaren and move forward this exciting project with our JV partners, Art-Invest Real Estate and ECE.

“Fitzrovia is becoming one of London’s most sought-after areas and 101 on Cleveland Street will be a stunning addition to its residential market”.

Demolition and substructure works on the island site are being carried out by Erith with main construction work due to start early next year.

David Miller, McLaren’s Regional Managing Director – London, said: “McLaren has extensive experience in the residential and mixed-use sector, and it is great to be a part of a team delivering high-quality homes in this part of London”.

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£300m A1 widening around Gateshead goes in for planning

Plans for up to £300m of improvements to the A1 around Gateshead have been submitted to the planning inspectorate.

Allerdene railway bridge over East Coast mainline to be replaced

Highways England is planning to widen a 2.5 mile stretch of the A1 dual carriageway between Birtley (junction 65) and Coal House (junction 67).

The project will involve widening of the A1 south of Gateshead to four lanes on the southbound carriageway and three lanes with lane gain on northbound carriageway to provide additional capacity.

Works will include replacing the Allerdene railway bridge, which carries the A1 over the East Coast Mainline.

Plans to improve the dual carriageway next to the Angel of the North had been due to take place this year but work was delayed when resources were focused on upgrading the A19 around Sunderland.

The scheme was one of 16 projects rescheduled back in 2017.

If given development consent, construction could start by late 2020.

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NHS bid document blunder delays £150m Edinburgh hospital

An error in a tender document is being blamed for the delayed opening of Edinburgh’s £150m children’s hospital by more than a year.

The opening has been set back to 2020 because of ventilation problems in the critical care facility, which could cost an extra £90m to rectify.

An independent review of the governance of the project by KPMG has found that the main issue with ventilation in critical care stemmed from an error in a document produced by NHS Lothian at the tender stage in 2012.

Documents issued to bidders stated single bed cubicles and four-bed rooms in the critical care ward required a ventilation system with four air changes per hour. But the relevant guidance requires 12 changes per hour for this type of ward.

The bid race for the non-profit distributing PFI-style contract was won by Multiplex-led IHS Lothian consortium with a target date to open in July this year.

But days before the opening serious problems with the ventilation system were uncovered during tests by an independent contractor.

The Scottish Government said it would now parachute in a senior programme director to take responsibility for day to day delivery of the Royal Hospital for Children and Young People from now until the site is fully occupied.

A new national body – Programme for Government – will also be created to have oversight for the design, planning, construction and maintenance of major NHS Scotland infrastructure developments.

The KPMG report attributes this to human error and confusion over interpretation of standards and guidance. It also concluded that opportunities to spot and rectify that error were missed.

Scottish health secretary Jeane Freeman said: “I am of course bitterly disappointed that a mistake made in 2012 was not picked up earlier.

“This is a publicly funded project of strategic importance, which has not been delivered by NHS Lothian in compliance with the standards and guidance.

“The delay we now face will be borne by NHS Lothian staff, by patients and their families and the additional cost will be to the public purse.”

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New construction minister to receive divided Brexit message at UK Construction Week

The new Construction Minister Nadhim Zahawi MP is set to make his first industry appearance at UK Construction Week (UKCW), the UK’s largest built environment event, at the NEC in Birmingham on Wednesday 9 October.

A survey of over 900 construction professionals conducted by UKCW[1] asked respondents what their one request to the Construction Minister and the Government would be.

The results of the survey revealed an increasingly impatient industry still focused on Brexit, but split between those who want the Government to ‘Get Brexit completed’ (37%, with the vast majority of those favouring a “no ifs or buts” approach), and those who want to ‘Cancel Brexit altogether’ (32%).

Within the industry itself, the research reveals that it’s mostly architects who are Remainers, with 57% of those respondents choosing to make ‘Cancel Brexit’ their number one request, compared to 15% choosing ‘Get Brexit completed’.

This swaps over when it comes to contractors, with 44% of those respondents choosing ‘Get Brexit completed’ compared to 20% choosing ‘Cancel Brexit’.

Other political and policy issues came much further down the list. The alternative number one requests from respondents were for the Government to speed up initiatives in construction to tackle climate change (9%), the cancellation of HS2 (a surprising 4%, mostly from consultants), and reform to planning laws and policies to make it easier to build (3%).

Nathan Garnett, UKCW event director, said:

“The splits in the construction industry’s views simply reflect what’s happening in society generally. But it is a really difficult time for this sector at the moment, a sector that absolutely hates uncertainty. The Minister will hear this very clearly when he attends this year’s event – whether it’s deal or no deal, or cancelling it altogether, we just want to know how to prepare for the future.”

Despite the uncertainties, and to help the 30,000 or more industry delegates expected at the show, UK Construction Week is hosting a wide range of CPDs and keynote speeches to explain what can be done to prepare for the post-Brexit future.

For example, a major debate on the UKCW main stage will take place on Wednesday 9 October, on Brexit Boom or Bust? Industry Economic Forecast 2020. This features Professor Noble Francis, economics director at the CPA, Tom Hall, chief economist at Barbour ABI, and Lord Digby Jones, cross bench peer and businessman.

The Office for Product Safety and Standards will be holding workshops on timber regulations and the impact of a no-deal exit on timber importers.

The Department for Work and Pensions will be advising construction professionals in the UKCW Careers Centre and HMRC is in the Civils area of the show (stand C21). In addition, the Department for Education will be promoting apprenticeships and talking about educational options in the UK for EU nationals post-Brexit.

Nadhim Zahawi MP was appointed in July as the third Construction Minister so far this year. He will be giving a keynote address on the UKCW Main Stage on day two of the event, at 2:15pm. Pre-booking is strongly advised.

UKCW is one event with many sections, including Build sponsored by Easy-Trim, Building Tech, Civils, Energy and HVAC, Surface and Materials, and Timber. It also features Concrete Expo (8-9 October only) and Grand Designs Live (9-10 October only). Single registration gives free access to all areas of the show. Pre-booking is also strongly recommended for the extensive seminars and CPD programme.

Find out more about UKCW at: https://www.ukconstructionweek.com/


[1] Research with 906 respondents within the construction industry and registered to attend UK Construction Week was conducted in September 2019.

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