IRON ORE OPERATION
Slurry pipeline leak halts Anglo mine in Brazil
Anglo American’s most controversial mine, the Minas Rio iron-ore operation in Brazil, has been temporarily halted because of a leak in its 530km pipe that pumps iron-rich slurry to the coast for export.
The Minas Rio mine has cost $13bn to buy and build, falling well behind production targets and, according to some analysts, was the reason for the departure of Cynthia Carroll as Anglo CEO, the project being the one she agreed to buy and develop, running into stiff headwinds, particularly in securing the necessary permits for the pipeline across 33 municipalities.
Mark Cutifani, the bluntly spoken Australian appointed to replace Carroll, said in February "we overpaid for the resource" and there "were a number of errors". Anglo had learned hard lessons from the project, he said, responding to a comment from Bank of America Merrill Lynch analyst Jason Fairclough that Anglo "didn’t really cover itself in glory with Minas Rio".
The break in the world’s longest slurry pipeline was detected on Monday, with 300 tonnes of slurry containing 70% fine iron leaking out during a 25-minute period. Iron is inert and is not a danger to people.
"The operations were stopped, nobody was hurt and the situation is under control," Anglo said. "Anglo American is now focused on cleaning up the area affected by the leak," it said, adding it had sent water trucks to a nearby community.
It takes four days for the slurry to travel from the mine to the terminal, with the highly abrasive sludge moving at 6km/h down the only link to the port and a dedicated terminal. The concentrate has a high 67% iron content. It was too early to say how long the repair to the pipe would take and what the cost implications were for repairs and suspended deliveries to the port, said a company spokeswoman.
It is likely that Anglo would have stockpiles at the port facilities where it operates a plant to extract water from the slurry and have a high-grade fine iron ore concentrate to deliver to buyers.
The terminal has stockpile capacity of 1-million tonnes.
Difficulties in securing permits meant Minas Rio will only reach full production of 26.5-million tonnes from 2020, a full three years behind schedule.
In 2015, Anglo said the mine would reach 24-million to 26-million tonnes of production in 2016. Minas Rio delivered 16-million tonnes that year and 17-million tonnes in 2017. The 2018 forecast is for 13-million to 15-million tonnes, a drop caused by licensing delays. Minas Rio will reach 24-million to 26.5-million tonnes from 2020.
Anglo sold the ore for $65/tonne during 2017, delivering it to ships at a cost of $30/tonne, just shy of Kumba Iron Ore’s cost of $31/tonne for sought-after lumpy, high-grade ore that realised $71/tonne.