Anglo Cuts Sale Price on Brazil Mine Hit by Deadly Port Collapse
Anglo American Plc (AAL) agreed to a reduced price for its Amapa iron-ore mine in Brazil with buyer Zamin Ferrous Ltd. after the port used by the project was damaged by a landslide in March that killed six people.
Zamin will pay as much $266 million for all of Amapa after Anglo agreed to buy the 30 percent it doesn’t already own from Cliffs Natural Resources Inc. (CLF) and included it in the transaction, London-based Anglo said in a statement today. Anglo in January agreed to sell its 70 percent stake in Amapa to Zamin for $380 million, two people with direct knowledge said in June.
A landslide struck Port Santana, which Amapa uses for loading iron-ore shipments on the Amazon River on March 28, before the January deal could be completed. Anglo Chief Executive Officer Mark Cutifani, who took over from Cynthia Carroll in April, is reviewing its operations from Australia to Brazil in pursuit of savings and increased cash flow.
Anglo, which plans about $16 billion in investments in Brazil through 2014, will assume responsibility for an insurance claim Amapa is making, which has a cap of about $170 million, it said in the statement. Amapa reported a loss before tax of $369 million for 2012 and had gross assets of $404 million as of June 30, Anglo said.
Zamin will make an initial payment of $136 million, and pay as much as $130 million over five years, based on movements in the market price for iron ore, said Anglo, which will use the proceeds to pay debt. Anglo seeks to complete the deal by the end of the year, it said, without saying what it paid for the Cliffs stake.
Cutifani is targeting a gain to annual cash flow of $1.3 billion and the company may seek buyers for some of the 15 assets identified for potential divestment, he said July 26. Anglo on Sept. 16 said it is withdrawing from the Pebble copper project in Alaska, leading to a $300 million charge.
Anglo has hired Goldman Sachs Group Inc., Morgan Stanley and UBS AG to sell as much as 49.9 percent of its Minas-Rio iron-ore project in Brazil, the two people said in June. The plan follows a $4 billion writedown of the $8.8 billion mine, processing plant, pipeline and terminal. First shipments are due to begin late in 2014 after years of delays and rising costs.
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