Name and Location
Minas-Rio iron-ore project, Minas Gerais, Brazil.

Client
Anglo American Brazil (Anglo Brazil).

Project Description
The Minas-Rio iron-ore operation has resources of about 5.77-billion tons and further resource potential exists.

The project comprises three assets – Serro, Itapa and Serra do Sapo (largest orebody) – and will involve the construction of a 525 km 26-inch-diameter slurry pipeline, which, when complete, will be the longest and the largest-tonnage iron concentrate pipeline in the world.

Minas-Rio includes the development of a mine at Conceição do Mato Dentro and the construction of a beneficiation plant at Alvorada de Minas.

The beneficiation plant will convert the iron-ore into high-grade pellet feed. The pellet feed will be mixed with water to form a slurry, which will be pumped along the slurry pipeline to the coast at Açu, near São José de Barra, in Rio de Janeiro state.

There the pellets will be dried before being loaded onto ships.

Value
The cost of building the mine is expected to increase from $5.8-billion to at least $8.8-billion, if a centrally held risk contingency of $600-million is used in full.

Duration
In Anglo American’s half-year financial report in July 2012, it reported that, subject to resolving the existing licence challenges facing the Minas-Rio project by the end of 2012 and additional unexpected interventions not being encountered, first ore on ship was expected to be delayed to the second half of 2014.

Latest Developments
Construction of the project continues in line with the revised plan announced in 2012. By the end of 2013, the project was 84% complete and is on schedule to deliver first ore on ship at the end of 2014.

Attributable capital expenditure at the Minas-Rio project is on track at $8.8-billion, with cash unit costs in a competitive position in the lower half of the global seaborne iron-ore cost curve.

The main schedule risks identified at the end of 2012 have been resolved and, over the past year, significant construction and operational progress has been made.

Key Contracts and Suppliers
Ausenco (conceptual design; feasibility study; basic, advanced and detailed engineering; supervision for earthmoving; detailed design; procurement support; and construction supervision); Construçoes e Comercio Camargo Correa (slurry pipeline) and Turner & Townsend (Phase 1 – capital and project schedule review, ongoing contracts administration and cost control. Phase 2 – preparation of the Fédération Internationale des Ingénieurs Conseils document for professional services and the negotiation and settlement, in conjunction with Anglo American, of the professional services contract).

On Budget and on Time?
The project has been delayed several times, owing to a combination of market and environmental factors. Despite these challenges, Anglo American is targeting first ore on ship by the end of 2014.

The cost of the project is expected to increase to $8.8-billion.

However, the delivery of the project on schedule and within the revised budget depends on several development milestones being achieved over the next 12 months and other factors, including:
• that several residual land access constraints for the completion of the transmission line to the beneficiation plant and the development of the pipeline are resolved by the end of March 2013;
• that prestripping activity at the mine site begins in April and, prior to that, further work be done to deal with matters relating to caves in the mine area;
• that the tailings dam at the beneficiation plant is completed by the end of May, so that it can be filled during the forthcoming rainy season; and
• that no unexpected interventions are encountered, such as injunctions relating to licences.

Contact Details for Project Information
Anglo Brazil, tel +55 21 3031 3434.
Ausenco, tel +1 925 939 4420 or fax +1 925 937 8875.
Construçoes e Comercio Camargo Correa, tel +55 11 384 5511.