IRON AND STEEL
Anglo American could bring in partner for Minas Rio project
Outgoing CEO Cynthia Carroll says the company is considering bringing in a partner into its Minas Rio iron ore asset in Brazil.
Posted: Tuesday , 05 Feb 2013
CAPE TOWN (Reuters) -
Global mining group Anglo American could bring a partner into Minas Rio, a flagship iron ore asset in Brazil that has been battered by delays and cost overruns, outgoing chief executive Cynthia Carroll said on Tuesday.
The Minas Rio project was intended as a move to diversify Anglo from its South African base and boost its presence in iron ore.
But it has turned into a bruising top-of-the-market deal that contributed to Carroll's fall from grace and imminent departure from the company.
Anglo wrote $4 billion off the value of the asset last week, and has said the mine would cost $8.8 billion to develop, more than three times original estimates.
"If it makes economic sense we will pursue it. We have been talking about a partnership for some time. We really need to establish what that value is," Carroll told Reuters.
She declined to comment on any ongoing discussions.
Anglo, like many operators in Brazil, has come under pressure from rising costs in a country where mining activity is growing and the construction sector is booming ahead of the 2016 Olympic Games and the 2014 soccer World Cup.
Analysts have questioned forecasts of cost-per-tonne that put Anglo below the industry average, but Carroll said she was "confident" Anglo would stick to its revised cost estimates.
"There are always going to be surprises, but we have enormous support from the government at all levels ... They understand, they want that project to get off the ground because it means jobs and tax revenues for them," Carroll said.
Carroll, who announced last year she would step down under pressure from investors over poor returns, will be replaced by current AngloGold Chief Executive Mark Cutifani.
At the top of Cutifani's to-do list, when he takes over in April, is the overhaul of Anglo's problematic platinum arm, Anglo American Platinum, squeezed by weak demand, rising costs and the legacy of last year's violent strikes and protests which killed more than 50 people.
The unit, best known as Amplats, has announced a plan to mothball two mines and sell one, potentially leading to 14,000 job losses. The plan has met with fierce resistance from South Africa's government, politicians and unions.
The company said last week it would delay a two-month consultation period by two weeks.
"It is not a matter of pushing back. We have a plan and we are going to work through that plan," Carroll said.
"I spent hours with (the) minister of mines and minister of labour a few weeks ago, and we all agreed we need to be around the table together. We have a very comprehensive social plan."
After what was initially a very vocal opposition to Anglo's plans and efforts to mitigate job losses, South Africa’s mines minister outlined a more flexible position on Tuesday, telling reporters she was "happy" with current talks.
"We can't come up with an approach which says non-negotiable. We need to be flexible as government," Susan Shabangu said after a speech at the Cape Town conference.
"We need to recognise the pressure faced by the company, but we also need to say 'how do we work together in making sure that we ensure that the 14,000 workers are not going to lose their jobs'," she added.
Carroll said the aim was to protect the business and Amplats' remaining 45,000 jobs. Amplats on Monday unveiled its first ever annual loss.
"The industry is not in a sustainable position and Anglo American Platinum is not," she said.
Carroll declined to comment on talks towards the sale of Amplats’ Union mine.