Anglo American’s Brazilian iron foray was fraught with misfortune from billion-dollar overruns to a global glut. As the $8.4-billion mine finally ramps up, it is catching a break from China’s greener approach to making steel.

The Minas-Rio iron-ore mine, the largest project in Anglo’s 98 years, is scheduled to reach output capacity pace by mid-2016. And while the start of operations coincides with a price rout of the steelmaking ingredient, the London-based miner is betting the higher quality of its product will help shield the venture from the malaise affecting the industry.

Minas-Rio produces pellet feed, an ultrafine type of ore containing about 68% iron. This allows Anglo to sell at a premium over the benchmark because steelmakers – including those in China, the biggest buyer – find it more productive and less polluting.

“China is more and more focused on the environmental impact of consuming iron-ore at the steel mills,” says Andreas Bokkenheuser, an equity analyst at UBS Group, in New York. “The lower silica content means they will consume more of it in the future,” he says, referring to the most common impurity.

Bokkenheuser says pellet feed with 68% iron can get a premium of as much as $10/t over the 62% benchmark price. Anglo, which expects to ship as much as 14-million tonnes this year and reach full-year capacity of 26.5-million tonnes in 2017, has declined to say how much it prices its product over the reference.

“For this type of iron-ore, we don’t have oversupply,” says Rodrigo Vilela, COO of Anglo’s project. “We don’t have any problem in placing this material around the world, thanks to its high quality.”

Minas-Rio includes a mine and processing plant in Conceicao do Mato Dentro, in the heartland of Minas Gerais, connected to a dedicated iron-ore terminal at the Acu port, in Rio state, through a 529 km pipeline. The rolling hills of this Brazilian state, once a major gold producing region, contain deposits with higher levels of iron on average than in the vast deserts of Western Australia.

Higher-content product also means economies of scale in shipping to China, says Philip Kirchlechner, director of Iron Ore Research, a consulting firm in Perth, Australia.

“If you transport over long distances like that, the freight you pay for a ship is the same for whatever you ship,” he says. “A higher iron grade improves the transportation economics to China.”

Vale, the world’s top producer, is also boosting production of its high-quality products and replacing lowe-grade material to improve margins. The Brazilian powerhouse founded 73 years ago at a mine close to Minas-Rio plans to increase its average iron content to 64.6% by 2018 from 63.7% last year, says CEO Murilo Ferreira.

“Our differentiated and further improved product quality will drive price realisation up.”

Getting Minas-Rio in place was a titanic task for Anglo, starting with the ill-timed acquisition of the project in 2008 close to the peak of the commodities supercycle. Shipments started in October, about four years later than initially scheduled, and development costs ballooned from an original estimate of $2.6-billion after permit delays and design changes.

Higher-quality ore is a key selling point of Minas-Rio’s product, says Paulo Castellari, CEO of Anglo’s iron-ore unit in Brazil.