Anglo’s pesky Brazil mine languishes in the pipeline

Business

Anglo’s pesky Brazil mine languishes in the pipeline

The risky project has come up against leaks and the challenge of securing permits

Allan Seccombe


Anglo American is pushing on with its Minas Rio iron ore mine in Brazil despite the difficulties it has had with securing permits and leaks on its 530km-long pipeline to the coast.
After a write-off year in which Anglo expects the asset to make a $320m loss, the company anticipates bringing the mine and its pipeline back into production in 2019, putting an estimated 19 million tons of iron ore into the market.
This is well below the 20 million tons to 24 million tons Minas Rio had expected to produce for 2019.
This is easily the most difficult asset in the Anglo stable and not without its detractors. Anglo CEO Mark Cutifani has said it would not have been a project he would have bought or built.
The mine is deep in rolling hills in Brazil and the single pipeline, the world’s longest transporting iron ore in slurry form, is a risky proposition, as the leaks showed, shutting the mine since March.
The mine cost at least $13bn to buy and build, coming in late, with permitting delays contributing to the overruns in time and money.
The mine, it could be argued, led to an enormous restructuring of Anglo since 2012 to repay a net debt of $13bn that was threatening the company’s existence. Anglo sold or shut nearly half its assets to address its debt.
The restructuring has created a more profitable and productive company, with a portfolio of solid assets, and a management team that is far more considered when it comes to thinking about new projects and growth.

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