High-quality iron-ore from Anglo’s low-cost Minas-Rio set to leverage price premium

12th May 2015

By: Martin Creamer

Creamer Media Editor

  

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CONCEICAO DO MATO DENTRO, Brazil (miningweekly.com) – The iron-ore that Anglo American is producing at low cost in the hills of Conceicao do Mato Dentro is meeting growing market demand for better quality, low-contaminant ore, visiting international mining journalists heard on Monday.

Minas-Rio’s pellet feed iron-ore products, which are transported down the world’s longest pit-to-port slurry pipeline to a dedicated ore terminal in Rio de Janeiro, have a high 68%-iron content with favourable physical and chemical specifications.

“Our customers are receiving more bang for their buck,” said Anglo American CEO Iron-Ore Brazil, Paulo Castellari.

He disclosed to Creamer Media’s Mining Weekly Online during question time that price premiums were already under negotiation.

With 1.2-million tonnes of first-quarter ore under its belt, Minas-Rio is currently focused on ramping up its operations to at least 11-million tonnes this year and then to 26.5-million tonnes capacity, which is targeted for mid-2016.

The free-on-board, post ramp-up cash cost of $33/t to $35/t provides Minas-Rio ore with a margin, even in these tough iron-ore times.

The iron-ore is being shipped to customers in China, India, the Middle East and Europe.

Some 2.8-billion reserve tonnes within a base of 5.3-billion resource tonnes provide a half-century of reserve life from what is described as a “fantastic deposit”.

A low strip ratio, good friable ore and the economic transport of ore in water over 529 km are strong advantages.

“It’s going to be a star performer,” Castellari forecast.

However, its market entry coincides with a major global iron-ore glut that is expected to suppress the iron-ore price for the next two to three years.

Located in the Brazilian state of Minas Gerais, Minas-Rio achieved its first ore on ship at Anglo American’s co-owned export facility at the Port of Açu, ahead of schedule on October 25.

After years of delays and cost overruns that tripled the project’s initial budget, eventual project capital expenditure came in at $0.4-billion below the revised budget of $8.8-billion for the operation in south-eastern Brazil, which is preparing to have 4 000 employees when in steady state and turn what is a major engineering achievement to positive account.

Unlike Brazil's huge Vale and Australian majors Rio Tinto and BHP Billiton, Anglo American is a smaller iron-ore contributor through Kumba Iron Ore, South Africa’s largest iron-ore producer, and now Minas-Rio, which will require time to recover its investment.

The other mining businesses of Anglo American, which turns 100 in 2017,  include platinum, diamonds, coal, copper, nickel and manganese, with Castellari formerly heading the company’s niobium and phosphates businesses in Brazil.

Edited by Creamer Media Reporter

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