Iron ore majors ramp up supply even as China faces challenges
Iron ore is one of the year’s worst performing major commodities, slumping by almost a quarter as China’s property crisis drags on.
Anglo American took nearly $3.6 billion in impairment charges in its 2014 financial results.
Minas Rio iron ore project, which was acquired in two separate transactions in 2007 and 2008, cost Anglo American $3.5 billion. Low iron ore prices were to blame.
“In 2014, a material worsening of the pricing environment for iron ore has been in evidence, driven by revisions to the outlook for global GDP growth, especially in the context of weaker Chinese construction activity, whilst at the same time supply from Western Australia has ramped up to outstrip weakening demand,” writes the company.
Other write downs were the Peace River Coal and other coal operations at $300 million and closure costs for the Drayton coal mine in Australia at $200 million.
In September 2014 the company put Peace River Coal into care and maintenance.
Anglo American said it had a EBIT of $4.9 billion, a 25% decrease from the previous year due to sharply weaker commodity prices partially offset by currency differences and increased production and sales volume.
Minas Rio is one of the world’s largest iron ore projects. When developed a 529km slurry pipeline and dedicated export facility at the port of Açu.
Minas Rio is an open-pit iron ore mine in Brazil. Image from IntelligenceMine.
