Anglo American

http://www.reuters.com/

CONCEIÇÃO DO MATO DENTRO, Brazil, June 1 A giant truck carries chunks of sparkling mountainside to a web of yellow conveyor belts at a huge mine in eastern Brazil, a few more hundred tonnes of iron ore that are good for its owner Anglo American but bad for a battered global market.

Part of a new generation of massive mines contributing to a supply glut, the Minas-Rio mine has the scale and modern design to produce iron ore, the main ingredient in steel, at well below the costs of more traditional projects.

“We’ll be competitive wherever the price is,” Paulo Castellari, the iron ore head for Anglo in Brazil, said on a recent visit.

But only a four-hour drive away, in the sleepy town of Itatiaiucu, workers at older mines are being laid off. Almost everyone in the town of 12,000 people follows the price of iron ore and for the last year they have watched it drop in half to near the lowest level in a decade. With it, about 20 percent of mining jobs in the town have been cut, the local union says.

“I go to work every day wondering if I’ll be next,” said José Roberto, 55, who has worked for 27 years at a local mine now owned by steelmaker ArcelorMittal, where the union says 30 of about 300 workers have been laid off in recent months.

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http://www.bloomberg.com/

Anglo American Plc’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’s 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 ultra fine type of ore containing about 68 percent iron. That 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 the iron ore at the steel mills,” Andreas Bokkenheuser, an equity analyst at UBS Group AG, said by telephone from New York. “The lower silica content means they will consume more of it in the future,” he said, referring to the most common impurity.

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http://www.bloomberg.com/

Anglo American Plc should sell its iron-ore assets and focus on diamond and platinum operations for the benefit of its shareholders, according to Investec Plc. The producer of minerals from Australia to Brazil could raise as much as $4.66 billion selling assets in South Africa and Brazil, analysts Marc Elliott and Hunter Hillcoat said.

“A disposal of the entire iron ore portfolio would be a game changing transaction, strengthening the balance sheet, reducing the risk profile of the group and potentially enabling a substantial re-rating,” the analysts said in a note.

Iron-ore prices reached a decade low of $47 a metric ton on April 2 before rebounding to $59. Investec forecasts prices will average $55 a ton this year before rising to $80 a ton by 2019.

Anglo, which owns about 70 percent of Kumba Iron Ore Ltd., Africa’s largest producer of the steel-making raw material, in October began shipments from its Minas-Rio mine in Brazil as prices slid after the largest producers including BHP Billiton Ltd. expanded capacity amid slowing demand from China.

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