Final phase of Minas Rio mine expansion a priority for Anglo — report
Almost a year after market rumours indicated that Anglo American (LON:ALL) was planning a complete exit from Brazil, the company is now about to begin the last phase of a key expansion of its Minas Rio iron ore mine, in Minas Gerais state.
The final developments, Anglo Brazil’s CEO Ruben Fernandes told a local mining news site, will need a $308 million (R$1 billion) investment and will allow the massive mine to reach full capacity of 26.5 million tonnes of iron ore by 2019.
Anglo paid about $5.5 billion to former Brazilian billionaire Eike Batista for Minas Rio in two stages in 2007-2008. It then had to spend about $8.4bn more to bring it to full production, which began in 2014, more than twice what was originally projected.
The deal soon soured as rising global iron ore output overwhelmed demand, causing prices to tumble 80% from their 2011 peak.
But after an unexpected but quite welcome rally in 2016 (the commodity climbed 81% last year), Anglo’s costly bet for iron ore may finally pay off. Better demand and a more restrained approach by top producers Vale and Rio Tinto are likely to carry into 2017, limiting the steel-making material potential price drops, according to some analysts.
This year “will bring more supply than current pricing can handle, so pricing should see downward pressure from the current $80 a ton levels,” Jeremy Sussman, an analyst at Clarksons, told Bloomberg.
Ore with 62 percent content in Qingdao ended the year at $78.87 a tonne, just below a two-year high of $83.58 hit on Dec. 12, according to Metal Bulletin Index.