[miningmx.com] — ANGLO American said Tuesday it has secured long-term port tariff arrangements for its Minas-Rio iron ore project in Brazil, as well as clarity about the port’s capital funding.
“We have now secured an extremely competitive cost position for our world class Minas-Rio iron ore project in Brazil, with a FOB (Freight on Board) cost well inside the first quartile. The optionality for port expansion to more than 90 million tonnes per year and the priority rights we have for our iron ore shipments at the port make this a key strategic asset for Anglo American in Brazil,” said Anglo CEO Cynthia Carroll.
The group has agreed a fixed 25-year iron ore port tariff agreement with port partner LLX SA in relation to the LLX Minas-Rio owned iron ore port facility at Açu. Anglo American owns a 49% stake in LLX MR.
The first phase of the Minas-Rio project will produce 26.5 million tonnes per year of iron ore. In respect of this tonnage, Anglo American will pay a net port tariff of approximately $5.15 per tonne. Taking into account Anglo American’s shareholding in LLX MR, the cost will be $7.10 per tonne gross. This will reduce to $4.25 per tonne for volumes in excess of 26.5 mtpa, provided there is no need to expand the port to accommodate that excess volume.
Combined with the expected low operating costs of the mine, beneficiation plant and pipeline, Anglo American expects a highly competitive, first quartile FOB cost position for Minas-Rio.
Anglo American has also secured a long-term tariff arrangement for all its iron ore volumes beyond the first phase of the Minas-Rio project.
The level of the expansion tariff would depend upon the capital cost to expand the port to accommodate those additional volumes. Tose capital cost would be determined in due course.
As part of the agreement to secure the long-term tariff arrangements, Anglo American has agreed to fund a greater share of the development cost of the first phase of the port – expected to result in additional capital expenditure attributable to Anglo of about $525m. Anglo’s total share of the port development cost would be $1.2bn.
