Anglo American mulls selling majority stake in Brazil's Amapa iron ore for $1 bn
29 December 2011
Anglo American is planning to sell its majority stake in the Amapa iron ore project in northern Brazil, a move that may fetch the London-based diversified miner around $1 billion, agency reports said today.
The UK-listed miner is reported to have received several enquiries on the Amapa iron ore project from a number of unnamed companies, and the company is considering selling its entire 70 per cent stake so that it can concentrate on the development of its Minas - Rio iron ore mining project in Brazil.
Anglo American had acquired the stake in Amapa along with other assets from Brazilian billionaire Eike Batista's MMX for a total of $5.5 billion.
An internal valuation has put the Amapa operation's value at up to $1.5 billion, which would make Anglo American's 70 per cent stake worth over $1 billion.
Amapa project, however, is mired in logistical problems since the quantity of ore that can be shipped from the port in the Amazon that serves the mine is restricted as only a small vessel can navigate the river system, which in turn increases the freight costs.
The mine is comparatively small and the operational logistics in the Amazon makes it a difficult business, according to analysts.
Anglo American said it would rather focus on its larger iron ore project in Brazil - the Minas-Rio project - which is closer to Brazilian steel mills and is currently scheduled to come into full production in the second half of 2013.
But, last week, the miner raised costs at the Minas Rio iron-ore project for the fourth time to as much as $5.8 billion.