PIPELINE PROBLEMS
Minas Rio albatross will weigh on Anglo’s profit
No further production is expected from the Brazilian iron-ore operation for the rest of the year, thanks to a leaky pipeline
The Minas Rio mine in Brazil, which has cost Anglo American at least $13bn to buy and build, could cost the company up to $400m in earnings and is unlikely to deliver much beyond the 3-million tonnes it produced before being shut down to manage repeated leakages in a 530km pipeline. The mine, which is the most controversial in the Anglo stable, has been more expensive and delayed than the company would have liked, earning the opprobrium of analysts and investors who have long regarded it as a bad investment. There have been two leaks at the Minas Rio pipeline in March. It is arguably the most risky part of the operation that relies on the single mechanism to get its high-grade iron ore to the coast. There is no economically viable alternative to the pipeline to move highly abrasive iron ore from the rugged inland environs where the mine is situated. Minas Rio would restart production only in the fourth quarter of 2018 and reduce Anglo’s full-year earnings before interest, tax, depre...
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