Anglo American to pump $2 billion into Brazil iron project this year
Anglo American Plc (LON:AAL) will spend over US$ 2 billion this year at its Minas-Rio 5.8-billion ton iron ore project in Brazil, the world’s second-largest exporter of the steel-making ingredient.
Anglo Brazil’s iron ore business unit president, Paulo Castellari Porchia, told Bloomberg that the company hopes to close a deal with steelmaker Ternium SA (TX) by June, to supply iron ore from the South American country.
Anglo American was granted a licence to develop Minas-Rio, Anglo American’s largest global investment, in 2010. The project includes construction of a mine, beneficiation plant, 525km slurry pipeline and port facility.
When completed the facility will process 26.5 Mtpa iron ore pellet feed. The company is targeting the second half of 2013 for the first shipment of iron ore from the mega-project.
With Minas, located in Minas Gerais state, Anglo 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.
Initially budgeted at $5 billion, the company has said it is expecting capital costs to rise by around 15% to $5.78 billion.
About 50% of the mine’s production will be sold to clients in the Middle East and the remaining 25% to Asian customers.