Anglo CEO Cools on Minas-Rio Stake Sale as Prices Climb
Anglo American Plc (AAL), the mining company investing $16 billion in Brazil, is content keeping full ownership of its Minas-Rio project as iron-ore prices recover and development advances without fresh delays.
“We’re not keen to motor too quickly” on a partnership, Chief Executive Officer Mark Cutifani said in an interview following a conference on mine safety in Johannesburg yesterday. “The way things are going and the better it looks, the more inclined I am to stick with it ourselves.”
Anglo earlier this year said it was seeking a partner for the $8.8 billion iron-ore mine after having to write down the value of the project by $4 billion following cost overruns that preceded the departure of former CEO Cynthia Carroll. Prospects for the mine are improving as Chinese demand for iron-ore increases and building work meets targets, Cutifani said.
“I came out of a business that just delivered three major projects on time and on schedule,” he said, referring to his previous role as CEO of AngloGold Ashanti Ltd. (ANG), the third-largest producer of the precious metal. “I’m hoping that with all the work we’ve done, we’ve got everything in place to deliver the same sort of result, given that we’ve had a tough time early.”
First ore shipments from Minas-Rio are scheduled for late 2014 after years of delays and budget increases. Iron ore for immediate delivery at Tianjin port in China, a benchmark price for the commodity, was little changed at $133.20 a metric ton yesterday, according to a price index compiled by The Steel Index Ltd. It has risen 21 percent since the beginning of June.
“The price of iron ore has been doing a little bit better than before,” Cutifani said. “That’s good news. China has been doing pretty well. We’re happy to be where we are today, albeit disappointed at what we had to pay for the project overrun.”
Even so, Anglo American would sell a stake in the mine providing it creates value for shareholders, he said. “We had a number of people who said they’d be interested in having a chat, so we’re still open.”
Anglo plans to invest more than 35 billion reais ($15.9 billion) in Brazil in the 2007-2014 period, Cutifani said last month at a conference in Belo Horizonte.
Cutifani told the safety conference in Johannesburg yesterday mining fatalities from rock falls in South Africa fell by 50 percent to 16 in 2012, compared with the previous year, after the creation of a CEO Elimination of Fatalities Team. There have been 13 deaths from rock falls this year in South Africa.
“The relative improvement in South Africa has been better than anywhere else,” Cutifani said. “We’re very proud of that.”
Companies, unions and the South African government aim to come up with a plan to compensate mine workers who have contracted diseases such as lung cancer and silicosis in the next 12 to 18 months, he said.
“Given we’ve made such a big improvement on safety, we have to work out how we can make those strides and even more in health,” he said.
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