Anglo American wont resume production at its massive Minas Rio in Brazil until the fourth quarter of 2018 due to two pipeline leaks that forced it to halt operations in March, and which will cause the miner an annual group earnings (EBITDA) loss of $ 300 to $ 400 million.
The announcement is the last of a string of difficulties Anglo has faced with the mine, which was expected to produce 16 million tonnes of iron ore this year, but that will now generate just 3 million tonnes. The operation is Anglo Americans biggest development project, and its bet on the future of iron ore, but so far it only accounts for a small percentage of its overall profits as it is still in ramp-up phase, which has taken longer than expected.
Minas Rio has suffered repeated delays and is on hold pending an investigation into two leaks in a month in the more than 500-km pipeline that helps to deliver its iron ore to export markets, which has already cost Anglo $ 58 million in fines.
The worlds number four diversified miner bought the iron ore project in Southeaster Brazil during the commodity prices boom of 2007-2008, paying local ex-billionaire Eike Batista $ 5.5 billion for it. It had to then spent another $ 8.4 billion, more than twice what was originally projected, to bring Minas Rio to production in 2014. Anglos copper production grew by 9% to 154,900 tonnes compared with a year earlier, thanks to higher grades at its Chilean Los Bronces mine and improved plant performance at Collahuasi, also in Chile.