China’s 2025 steel demand to fall 1.5% on year, state research institute says
China's steel consumption in 2024 and 2025 is forecast at 863 million metric tons and 850 million tons, respectively.
London-based mining giant Anglo American (LON:AAL) confirmed Tuesday it will take a $4 billion writedown on the value of its flagship Minas Rio iron ore project in Brazil due to delays and mounting development costs.
The company said its capital expenditure on the project was now expected to hit $8.8 billion, more than three times the $2.6 billion projected back in 2007. It also revealed that its forthcoming full-year results would be hit by the impairment charge.
“We are clearly disappointed that the diversity of challenges that our Minas Rio project has faced has contributed to a significant increase in capital expenditure,” said outgoing CEO Cynthia Carroll.
“Despite the difficulties, we continue to be confident of the medium and long-term attractiveness and strategic positioning of Minas Rio and we remain committed to the project, ” she added.
Of the 300-odd licences required for the project, only 17 are left outstanding, added Carroll, who will be replaced by AngloGold Ashanti’s (NYSE:AU) CEO, Mark Cutifani, at the end of March.
Minas Rio is one of Anglo’s major capital allocation fiascos of recent years and was largely responsible for Carroll’s deteriorating image.
The company acquired its first stake in the project in 2007 and took control the following year after sealing a $5.5 billion deal with Brazilian billionaire Eike Batista’s MMX.
So far Anglo has spent $5 billion on developing it and said last year that total development costs could exceed $8 billion – more than three times original estimates.
The project was intended to help diversify Anglo’s assets, which at that point was heavily dependent on South Africa for the bulk of its revenue. Instead it turned out to be a bruising top-of-the-market deal.
Falling profitability and worries about Minas Rio has weighed heavily on Anglo’s stock.
The $39 billion counter is down just under 30% over the past year, compared to peers BHP Billiton, Rio Tinto and Xstrata, which have been trading mostly flat.
Shares in the group were trading high in London on Tuesday afternoon, climbing 2.75% to 1,924.00 at 2:33 pm GMT.
Anglo American will release its 2012 results on February 15.
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