Rinehart’s Hancock weighs $3.3 billion iron ore mine project
Hancock acquired a 51% interest in the Mt Bevan project from Legacy Iron Ore Ltd. and Hawthorn Resources.
Anglo American’s CEO, Cynthia Carroll, said yesterday the company faces further disruption to its US$6 billion Minas-Rio iron ore operation in Brazil, although it hopes to resume construction at the site.
Since the start of activities, the project has been affected by seven interruptions relating to different environmental licences and permitting processes.
“We are currently in discussions about another legal interruption notification on a power transmission line licence, and we are confident construction activity on the line will resume soon,” the company (LON:AAL) said in a statement.
On Monday, the miner halted preliminary work for installation of a power line at its Minas-Rio iron ore project in Brazil, following a judge’s decision to suspend the installation licence for the line.
The diversified miner is not allowed to undertake new works at the site of its largest global investment, such as clearing vegetation, excavating and removing soil for the opening of the mine, until it is deemed safe for an archaeological site within its perimeter, said the prosecution service of Minas Gerais state last week.
Anglo American said it would challenge in court at least one of these setbacks: the public ministry decision that affects the line that will supply power to the project’s iron ore concentrator plant.
Strategic project
Bringing the Minas-Rio project into production is key for Anglo, which bought the project for nearly $5.8 billion in a two-stage deal that was wrapped up in August 2008, just before the commodities markets went downhill with the start of the financial crisis.
“At full production, the delivered cash cost to China will be around $45 to $50 a tonne. This is at the very low end of the cost curve,” said Carroll.
With Minas, the company is trying to get a share in a market dominated by local players, such as billionaire Eike Batista’s MMX Mineracao (MMXM3) & Metalicos SA and Ferrous Resources Ltd.
Anglo has raised its cost projection at least four times to as much as $5,8 billion in December last year, since it acquired Minas. This is more than double the figure planned when the company agreed to buy those assets in Brazil, the world’s second-largest exporter of iron ore.
The project includes construction of a mine, beneficiation plant, 525km slurry pipeline and port facility.
When completed the facility would process 26.5 Mtpa iron ore pellet feed. About 50% of the mine’s production will be sold to clients in the Middle East and the remaining 25% to Asian customers.
Comments
LUGUZ RD
THE ANGLO AMERICAN CEO MUST BE INCREDIBLY STUPID OR GOT MONEY UNDER THE TABLE IN DETRIMENT OF SHAREHOLDERS AND COMPANY.