Anglo American writes down $4 bn over Brazilian project delay
30 January 2013
Global mining giant Anglo American Plc said yesterday that the company will write down approximately $4 billion related to delays at its large iron ore venture Minas-Rio in Brazil.
The move follows another major write off amounting $14 billion a fortnight ago by the world's third-largest miner Rio Tinto Plc on account of its Mozambique coal mine acquisition and Alcan aluminium business, following which the company's long-serving chief executive Tom Albanese had to quit. (See: Rio Tinto CEO quits after $14-bn write-down)
Anglo American acquired Minas-Rio in 2007-08 from Brazilian billionaire Eike Batista for $5.2 billion when iron ore prices were at their peak. However, the project became saddled with delays and cost blowouts that forced the company's chief executive Cynthia Carroll to put in her papers. (See: Anglo American CEO Cynthia Carroll resigns under shareholders pressure).
The project involves construction of a state-of-the-art open-cast iron ore mine and beneficiation plant in the states of Minas Gerais and Rio De Janeiro with an initial capacity of 26.5 million tonnes per annum of iron ore pellets, a 525-km pipeline for transportation of slurry from the mine to the port and loading facilities at Port of Acu on the eastern coast of the country.
The company has faced major problems related to acquisition of numerous licences and accession of land for its slurry pipeline.
Anglo American's outgoing CEO Carroll, who is due to leave in April this year, said: ''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, leading to the impairment we have recorded.''